Several days ago, a blockade of the Canadian-owned Kumtor gold mine in Kyrgyzstan by some 1,000 native protesters came to an end after Prime Minister Zhantoro Satybaldiyev visited the area and promised a renegotiation of the mining agreement. This one mine accounts for a staggering 12% of Kyrgyzstan’s GDP, yet the majority of profits go the Canadian owners Centerra and the government elite back in the capital Bishkek. Whilst Centerra claim to have paid over $1bn in taxes since assuming control of the mine, it is unclear what use the Kyrgyz government has made of such a windfall.
Such a scenario is a common feature in the developing world today. In Africa, for instance, the Chinese have bought-up vast quantities of land for mining purposes. Profits are seldom reinvested in the local community and the Chinese even prefer to import their own workers rather than using native employees. Consequently, foreign companies are exploiting resources almost exclusively for their own benefit, with only a corrupt layer of government officials profiting in the host country.
Because of the profitability of mining in general, this phenomenon has existed for centuries. One historical comparison relates to the current situation at Kumtor. Potosi in Bolivia was founded by Spanish colonists in 1545 after deposits of silver were found in the surrounding mountains. Within twenty years, these resources were being exploited on a monumental scale, when mining techniques were still rudimentary and the process of mining was exceedingly labour-intensive.
Of course, by the middle of the sixteenth century, there were few colonists in Bolivia. Indeed, the inhospitable nature of the high plateaus meant that only pacifying conquistadores and plucky government officials had made it to Potosi by the time the silver mines got working.
Consequently, it was the subdued native population that was required to form almost the entirety of the workforce, including the arduous task of lumping ore up and down the mountainside. By 1603, some 60,000 natives were working the Potosi mines yet, with the exception of some very basic and oft-delayed wages, they were not compensated. Instead, they were tasked with hauling the silver across vast distances of treacherous terrain to the coast, where it was transported on to Lima and eventually Santo Domingo. From there it was shipped back to Seville and the casa de contratacion where, after the Crown had accepted its royal fifth, it was dispersed across the continent.
Natural resources drive the global economy and ensure human existence yet it is so often the case that the people surrounded by the most abundant resources are those most threatened with extinction. The Kyrgyz workers helping operate the Kumtor mine are important but not irreplaceable. Consequently, despite their justifiable claims that the land being mined is their own, they are rendered irrelevant in the negotiating process for profits.
Prime Minister Satybaldiyev may have compromised with the protesters by agreeing to renegotiate the Kumtor mining agreement with Centerra. However, his bargaining position is not strong. The Canadians have the capital and the technology required to develop the mine. Nationalising it would jeopardise the potential profits for the Prime Minister and his clique in Bishkek.
In Potosi, after the native population was depleted by disease, starvation and escape, African slaves were imported by the Spaniards as a replacement. They worked the Potosi mines until the silver was finally depleted at the beginning of the 19th century.
The Canadians, whilst not resorting to such barbaric methods, will do the same. They will mine the gold from Kumtor until it is no longer profitable; they will source workers from wherever they have to; and they will reserve the bulk of the profits for themselves.
Such is the case when a people loses control over its own natural resources.