In Kyrgyzstan, on March 6 this year, a government decree will come into force on a new procedure for the import / export of ore containing precious and non-ferrous metals. Experts say that the new rules of the game can lead to an outflow of capital from the country.
On February 12, 2020, a government decree was signed in Kyrgyzstan, the main idea of which is to combine the functions of testing laboratories and inspection companies. It is explained that this was done in order to strengthen the responsibility of the latter for the information indicated in the accompanying conclusions on the export of ore.
“The task of the state is to establish records of ore exported from the republic,” Karybek Ibraev, deputy head of the State Committee for Industry, Energy and Subsoil Use, emphasized in a conversation with the Akchabar correspondent.
Intentions are the most good. But officials did not take into account that the new requirement will greatly affect the market for inspection services and lead to a rise in the cost of their services for mining companies.
So, today in Kyrgyzstan four companies operate in the field of inspection services: Als inspection UK limited, Alfred H. Knight, Bureau Veritas, LLC SGS Bishkek. None of them in Kyrgyzstan have their own laboratory.
“Of course, we calculated how much it would cost to open a testing laboratory in Kyrgyzstan. This requires huge investments, and since the market is too small in the Kyrgyz Republic, investments will pay off for more than 15 years,” the source said.
In this connection, inspection companies hired a local testing laboratory of the Central Research Laboratory, accredited in accordance with all international requirements, to conduct research on the content of precious metals in ore. This allowed inspection companies to strike a balance between the timing and cost of research.
However, after coming into force of the above-mentioned local government regulations laboratory no longer be able to carry out such tests. The only way will be to send samples abroad. However, after the above-mentioned government decree comes into force, the local laboratory will no longer be able to carry out such tests. The only way will be to send samples abroad.
The nearest accredited laboratory SGS Bishkek is located in Chita (Russia), Als inspection UK limited and Alfred H. Knight in Liverpool (England), Bureau Veritas in the Baltic States. Industry experts say that this practice will increase the cost of services for mining companies up to five times, and the analysis time of up to one and a half months. All this together can lead to the fact that investors will simply become unprofitable to work in Kyrgyzstan.
But even if we exclude the issue of profitability, there is another innovation, because of which, after three days, the work of about seven enterprises that export ore will be paralyzed.
We are talking about the requirement for accreditation according to the national standard ISO 17020. The Akchabaru Kyrgyz Accreditation Center confirmed that today no inspection company has such accreditation, which means it cannot conduct ore research. To get it, you must go through a procedure that takes from 6 to 18 months.
“By the time this resolution comes into force, companies must bring their activities in line with new requirements. Today, there are risks that they will not have time to do this. Therefore, for our part, we appeal to the government with a request to postpone the entry into force of this resolution. Otherwise, according to information from subsoil users, there is a high risk of stopping production processes,” said Askar Sydykov, Director of the International Business Council.
Leaving the market of large investors will hit primarily on the budget. Over the years, the companies have made a significant contribution to the development of the country. Together, according to the Open Budget portal, they replenished the budget by more than 8 billion soms.
But not only the state treasury will not receive millions of taxes, ordinary citizens will also suffer. Today, enterprises provide about 4 thousand people with work, almost each of them has a family. What will happen if they are left without work. It should be noted that a large share of companies is located in the Jalal-Abad region, which is subsidized. According to the National Statistical Office, 32.2% of the population are poor. What happens if mining companies leave the region? Regions, instead of the promised state support, will find themselves in a difficult situation.