VZCZCXRO2270
RR RUEHAST RUEHBI RUEHCI RUEHDBU RUEHLH RUEHLN RUEHNEH RUEHPW RUEHSK
RUEHVK RUEHYG
DE RUEHEK #0990/01 2530906
ZNR UUUUU ZZH
R 100906Z SEP 09
FM AMEMBASSY BISHKEK
TO RUEHC/SECSTATE WASHDC 2637
INFO RUCNCLS/ALL SOUTH AND CENTRAL ASIA COLLECTIVE
RUCNCIS/CIS COLLECTIVE
RUEHBJ/AMEMBASSY BEIJING 3232
RHEFDIA/DIA WASHDC
RUEKJCS/OSD WASHDC
RUEAIIA/CIA WASHDC
RHEHNSC/NSC WASHDC
RUEKJCS/SECDEF WASHDC
RUEKJCS/JOINT STAFF WASHDC
RUEHGV/USMISSION GENEVA 1531
RUEHVEN/USMISSION USOSCE 3582
RUCNDT/USMISSION USUN NEW YORK 2973
RUEHNO/USMISSION USNATO BRUSSELS BE
RUEHBS/USEU BRUSSELS
RUEHLMC/MILLENNIUM CHALLENGE CORP
RUMICEA/USCENTCOM INTEL CEN MACDILL AFB FL

UNCLAS SECTION 01 OF 03 BISHKEK 000990 
 
SENSITIVE 
SIPDIS 
 
DEPT FOR SCA/CEN (GORKOWSKI) 
 
E.O. 12958: N/A 
TAGS: PGOV PREL KG
SUBJECT: AMBASSADOR VISITS KYRGYZSTAN,S LARGEST GOLD MINE 
AND FOREIGN INVESTMENT 
 
REF: BISHKEK 491 
 
BISHKEK 00000990  001.2 OF 003 
 
 
¶1.  (SBU)  SUMMARY:  On August 24-25, Ambassador visited the 
majority Canadian-owned Kumtor gold mine.  Located on the 
southern shore of Lake Issyk-Kul approximately two hours away 
from Bishkek, the Kumtor mine is the largest foreign 
investment in Kyrgyzstan, with total investment valued close 
to USD 1 billion.  The mine uses U.S.-made large earth moving 
equipment, including several 150-ton Caterpillar dump trucks. 
 From the Ambassador,s observations, Kumtor is treating both 
workers and the environment relatively well, while providing 
economic opportunities and significant government revenues to 
Kyrgyzstan.  The Kyrgyz Government's attitude toward Kumtor, 
unfortunately, has been adversarial despite the benefits for 
the country.  END SUMMARY. 
 
Supplying the Mine 
------------------ 
 
¶2.  (U)  In company with the Turkish and Korean Ambassadors, 
and guided by Kumtor President Robert Wunder, Ambassador 
visited the majority Canadian-owned Kumtor gold mine on the 
southern shore of Lake Issyk-Kul on August 24-25.  After 
passing high-altitude medical checks, the group assembled in 
Bishkek and traveled to Kumtor's marshalling yard, about two 
hours away on the Western edge of Lake Issyk-Kul.  The yard 
is where supplies are loaded onto U.S.-manufactured Mack 
trucks for the last stage of the trip to the mine, located 
high in the Ala Too mountains. 
 
¶3. (SBU)  Apart from the trucks, the predominant features of 
the marshalling yard are huge stacks of drums of cyanide, 
ammonium nitrate, and diesel fuel.  When the Ambassador noted 
that those ingredients could be combined into a large and 
poisonous bomb, Wunder responded they are conscious of the 
security risks, and that the yard has 39 guards.  He allowed, 
however, that they generally worry more about the possibility 
that their own staff will appropriate the ammonium nitrate 
for its more common use, as fertilizer. 
 
Balls of Steel (and also Lime) 
------------------------------ 
 
¶4.  (SBU)  Wunder said that in spite of the Kyrgyz 
Government's pressure to use more local sources, the cupidity 
and incompetence of local businessmen is pushing them in the 
opposite direction.  Until recently, Kumtor bought the lime 
and steel balls needed to process the ore from local 
companies, but they had recently terminated the relationships 
due to many problems.  Their lime supplier had demanded, and 
received, a large advance payment to increase production 
capacity, but after a company executive ran off with the 
payment, the company declined to honor the contract without 
additional compensation.  Similarly, their Kyrgyz supplier of 
steel balls was the lowest bidder, but after the company 
successfully delivered one container of balls on time and at 
the stipulated price, they began delaying shipments and 
attempting to raise the price.  In both cases, Kumtor turned 
away from the chutzpah of their Kyrgyz suppliers, and 
developed relationships with Russian ones, who are performing 
well. 
 
It Wasn't the Poison, It Was the Antidote 
----------------------------------------- 
 
¶5.  (U)  From the marshalling yard, it takes two hours of 
switchbacks on unpaved roads to reach the mine's entry point. 
 In spite of the 7,000 roundtrips that the marshalling yard's 
35 Mack trucks make every year, Kumtor does not believe it is 
cost effective to pave the road linking the two facilities, 
although they have regraded sections of it.  Conditions on 
the road are far from ideal:  Traveling in a convoy raises so 
 
BISHKEK 00000990  002.2 OF 003 
 
 
much dust that the Ambassador's driver became disoriented at 
one point, and had to stop until he could see.  The risk 
posed by limited visibility is not so much a fender bender, 
but rather bumbling off the 100-foot drop-off on the downhill 
side of the road. 
 
¶6.  (SBU)  Pointing out the site of a 1998 cyanide spill, 
Kumtor President Wunder doubted that limited visibility had 
played a role.  Kumtor's investigation found that the driver 
simply fell asleep and drove off a bridge, spilling his load 
of liquid cyanide into the Bokonbayeva River.  Wunder said 
that the subsequent illnesses of downstream villagers were 
not the result of the cyanide, but rather the results of the 
atropine shots the government had inadvisably administered. 
Acknowledging that spilling cyanide into rivers is unlikely 
to win Kyrgyz friends, Wunder listed the safety measures 
Kumtor has taken since the accident, including banning the 
transportation of cyanide in liquid form, and rebuilding most 
of the bridges in between the mine and the marshalling yard. 
 
Mining at the Edge of the World 
------------------------------- 
 
¶7.  (U)  At 4,400 meters on the edge of the pit, the 
Ambassadors were at the historical high point of the mine, 
then, according to Wunder, the highest gold mine in the 
world.  Mining activity has now chewed up several hundred 
meters of vertical rock, so that the active digging takes 
place some distance below the high point.  The scale of the 
pit was not apparent until the Ambassador saw a mining 
explosion below, and did not hear the accompanying boom for 
several seconds.  From the heights overlooking the pit, the 
Ambassadors were taken to a tunnel burrowing underneath it, 
where Kumtor is constructing a tunnel that will allow them to 
verify how deep below the surface the gold deposits extend. 
 
¶8.  (U)  Wunder said that the mine has to process 26 tons of 
rock to isolate 4 ounces of gold, about the amount in a 
man,s wedding ring.  At frequent intervals, heavily guarded 
and armored Brinks trucks lumber up to the mine to take its 
gleanings back to a bank in Bishkek. 
 
Mine Workers Unite! 
------------------- 
 
¶9.  (U)  A tour of the workers' living accommodations brought 
to light an interesting aspect of Kumtor's labor relations 
policy:  Rather than segregation of the sexes, all of the 
workers sleep together in barracks-type buildings.  While 
Wunder did not say that Kumtor encourages the formation of 
sexual relationships between workers, he did note that there 
is no anti-fraternization policy.  As happens not 
infrequently, workers who become pregnant are offered three 
months wages when they leave, and Kumtor will hold their jobs 
for them for up to five years. 
 
¶10.  (U)  The Ambassador managed to speak with several Kyrgyz 
workers away from her Kumtor minders, and for people living 
in barracks on the side of a mountain, morale was 
surprisingly high.  They universally and enthusiastically 
said that they liked their jobs, and they liked the pay even 
better. 
 
Comment: Strangling the Goose 
----------------------------- 
 
¶11.  (SBU)  Perhaps scarred by years of bad press and fears 
of nationalization (reftel), Kumtor executives seem to 
operate in a permanent defensive crouch.  At every turn, they 
lauded their safety and environmental accomplishments, while 
explaining that the underlying problems hadn't really been 
their fault.  They monitor the glaciers around the mine, and 
 
BISHKEK 00000990  003.2 OF 003 
 
 
have documented that they are receding, but are quick to 
point out that the cause is climate change, not mining 
activity. With surprising enthusiasm, they describe their 
plans for wrapping up operations by 2025, but before the 
question can even be raised, begin describing their plans to 
help local villages wean themselves from economic dependence 
on the mine before it closes. 
 
¶12.  (SBU)  From what the Ambassador observed, Kumtor is 
treating both workers and the environment relatively well, 
while providing economic opportunities and significant 
government revenues to Kyrgyzstan. It is unfortunate that the 
Kyrgyz Government's attitude to Kumtor has generally been 
akin to strangling the goose, which not only cuts down on the 
golden egg production, but also scares away other geese. 
GFOELLER