The nationalisation of the Kumtor gold mine in Kyrgyzstan has not lived up to official billing, in terms of expanding the flow of revenue into state coffers and driving growth. Company figures show production has steadily fallen in recent years, and income for the state budget has declined.

President Sadyr Japarov’s administration took over management of the mine in 2021 from Centerra Gold, a Canadian firm, amid allegations of environmental hazards and mismanagement, as well as a dispute over profit-sharing arrangements. In 2022, after a settlement with Centerra cemented the government’s control of the mine, Japarov declared it would serve as an engine for “steadfast growth and development.” 

Since then, however, gold output has declined. In 2019, the year before the Covid pandemic struck, the mine produced just over 600,000 ounces of gold, according to a Kumtor statement. The total fell to 556,000 ounces in 2022, the first full year of Kyrgyz state-run operations. Last year, gold production was down nearly 33% off the total five years earlier, amounting to under 404,000 ounces, according to figures issued by the mining company.

Kumtor officials project that output will slightly increase in 2025. At the same time, they upped the volume of gold reserves at the site from 127 tonnes to 261 tonnes.

Taxes and other “mandatory payments” by Kumtor to the state totalled almost $388mn in 2022, falling to $196mn in 2023 and roughly $185mn last year, according to company figures. This decline in revenue occurred amid a rapid increase in the value of gold, the average price of which rose from $1,966 per ounce in December of 2022 to $2,606 at the end of last year.

According to some estimates, Kumtor is responsible for generating about 12% of Kyrgyz GDP and about one-third of all revenue for the state budget each year. In 2022, Kumtor was embroiled in a scandal in which top state-appointed managers were prosecuted for misusing funds.

This article first appeared on Eurasianet here.