Mining Kyrgyzstan: Chinese Companies Encounter Increasing Conflict – The Diplomat

Crossroads Asia | Economy | Central Asia

Increased conflict between Kyrgyz citizens and Chinese mining companies highlights the necessity of more careful cooperation.

Credit: Depositphotos

Kyrgyzstan’s mining industry has long been considered one of the country’s leading economic sectors. During the Soviet era, Kyrgyzstan’s rich and diverse mineral resources had considerable promise for the Soviet Union. The Kyrgyz Soviet Socialist Republic was the USSR’s greatest source of mineral raw materials, accounting for 15-18 percent of total lead output, 40-100 percent of mercury, and 100 percent of antimony. From the early years of independence, the Kyrgyz government designated gold mining as a driving force in the economy. Even more important, as Saipira Furstenberg and Kemel Toktomushev wrote in a 2021 working paper, “Kyrgyzstan was among the first post-Soviet countries to liberalize its mining sector.” Currently, the mining industry accounts for more than half of the country’s industrial production, compromising 29.2 percent of its total GDP.

Local communities together with a few non-governmental organizations, however, have voiced opposition toward the mining sector. Opposition to mining in Kyrgyzstan stems from a variety of concerns. 

There has been a growing anti-mining opposition in Kyrgyzstan since at least 2012 In particular, Chinese mining companies have faced frequent problems and suffered violent attacks by local residents in various areas. In the town of Kurshab, near the city of Uzgen in Kyrgyzstan’s Osh region, a violent clash between local inhabitants and Chinese migrant laborers occurred in 2013, injuring 13 Chinese citizens. Protesters requested and forced the closure of a Chinese oil refinery in 2014, citing worries about soil and air pollution. According to the Oxus Society in Central Asia’s protest tracker, 603 protest activities occurred in Kyrgyzstan between 2018 and 2020, with 10 percent focused on anti-Chinese sentiments and Chinese mining operations in the nation. 

Given China’s sharp economic growth in the early 2000s, it has become the main investor and provider of development assistance for Kyrgyzstan, the second poorest country in Central Asia. Beijing accounted for about half of foreign direct investment (FDI) in Kyrgyzstan ($338.05 million) in 2019, with gold extraction and other metal sectors accounting for nearly 80 percent of all Chinese FDI. There are 111 Chinese mining companies in the country and China’s long-term strategy is driven by Beijing’s interest in seeking and accessing natural resources in Central Asia to ensure its own sustainable economic growth. Yet its activities present various concerns for the locals in Kyrgyzstan, ranging from cultural challenges to environmental degradation.

Beril Ocakli, Tobias Krueger, and Jörg Niewöhner in a 2020 article, “Shades of Conflict in Kyrgyzstan: National Actor Perceptions and Behavior in Mining,” point out that local communities’ “distrust towards the government and foreign companies, lack of structured multi-stakeholder dialogue, fear of environmental degradation, [and] perceived threats to health and livelihoods” are what lead to conflict in Kyrgyzstan. They claim that government authorities are unable to alleviate the harmful effects of mining due to a lack of confidence and coordination among national players. As a result, local populations continue to fight back against the negative effects of Chinese mining operations.

In the same way, Furstenberg and Toktomushev in their recent working paper stress “environmental and socioeconomic impacts from the proposed mine, the threats posed to agricultural livelihoods and water resources in the region” as the main drivers of disputes against Chinese mining operation. Their surveys and interviews in Naryn, Kyrgyzstan’s biggest region, revealed that 90 percent of respondents were concerned about environmental issues. Inhabitants in the area are concerned about water contamination, pasture degradation, harmful effects on crops and animals, and air pollution. 

The Kyrgyz mining sector, and the conflicts surrounding it, demonstrate a kind of market failure stemming from the negative externalities associated with the sector and Chinese investment. These externalities are mostly environmental and arise when “the actions of one economic agent make another economic agent worse or better off, yet the first agent neither bears the costs nor receives the benefits of doing so.” For example, a company seeks to reduce expenses and enhance profits by launching new initiatives that are environmentally hazardous. 

Given this market failure, 23 anti-Chinese demonstrations out of 42 in the 2018-2020 period were caused by ecological concerns in Kyrgyzstan. Environmental repercussions of China’s extractive operations include degradation of water, land, and various kinds of pollution. Parts of Kyrgyzstan have been blanketed in thick smog during the summer season for several years now. Bishkek, the capital of Kyrgyzstan, topped the list of the dirtiest cities in the world for a period at the end of 2020. And the Chinese imprint extends beyond Bishkek, as Nargiza Muratalieva wrote recently for CABAR, “the ecological footprint with a Chinese context is present not only in the capital of Kyrgyzstan, but also in other regions of the country”. Growing concern among locals about environmental issues is a powerful mobilizing element in the country, leading to an increase in conflict with Chinese miners. The Kyrgyz government, together with Chinese mining companies, need to corporate closely in order to mitigate and cope with current ecological issues and avoid further violent conflicts between locals and mining enterprises.

China, as a leading investor in Kyrgyzstan, directs most of its FDI to the mining sector. The Chinese capitalization of Kyrgyzstan’s natural resources has led to many conflicts and demonstrations since 2012, mainly driven by the growing degradation and pollution of the environment. It will be important for the Kyrgyz government and their Chinese partners to understand and address local concerns, with green development initiatives presenting a possible avenue for cooperation.