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IBC: A separate independent body should regulate the mining industry

August 30, 2022

At the roundtable “Problems and prospects for the development of the mining industry in Kyrgyzstan”, organized by the Mining and Metallurgical Trade Union of Kyrgyzstan on August 24, 2022, IBC Executive Director Askar Sydykov stressed the need to create a separate independent body that should regulate the mining industry and promote the adoption of balanced, expedient decisions.

The status of the State Geology, the regulator of the mining industry, which provides about 20% of the country's budget, was lowered to a department under the Natural Resources Ministry. Moreover, the ministry combines contradictory areas – environmental protection, forestry, geology, mining, and several control and supervisory functions of the former state environmental and technical inspection.

The IBC head also raised the issue of monopolization of laboratory research — inspections and analyzes of samples of ores and concentrates of precious metals. There are several such laboratories, including private companies with a worldwide reputation and standards of their activities. In the absence of competition, there are risks of a decrease in the quality of analyzes of ores and concentrates, the speed of analyzes, an increase in cost and corruption risks during analysis.

Askar Sydykov also spoke about taxation of the industry. In recent years, the tax burden of subsoil users has increased significantly. Since 2020, the government has increased royalty rates, tax rates on the income of gold mining enterprises exporting concentrates and ores of precious metals. Unprecedentedly, license retention fee rates were increased hundreds of times. Fortunately, from September 1, 2022, they are reduced.

The participants of the meeting – representatives of the main subsoil user companies, trade unions, businesses, and government agencies noted the particular importance of the mining industry for the country's economy.

This industry accounts for 10% of GDP and provides more than 20% of the budget, creates about 18,000 jobs and another 30,000 in other industries.

Therefore, it is so important to work together to change the situation in the industry for the better and constantly express the opinion of all stakeholders.

As a result of the discussions, the participants of the roundtable adopted a resolution with recommendations:

• Creation of an independent department in the field of subsoil use;

• Obligatory preliminary discussion with subsoil users, enterprises, industry institutions, business associations and trade unions of draft regulatory legal acts regulating the sphere of subsoil use;

• Digitalization of activities, including electronic reporting of subsoil use, holding electronic auctions, digitization of State Fund materials, as well as optimization of interaction between the department and the business community.