Newmont Gold Brings High-Tech To Uzbekistan Joint Venture Will Mine Ores Once Considered Uneconomical
Newmont Gold Co. plans a major inroad into the former Soviet Union as it braces to inaugurate a $225 million gold-mining operation in Uzbekistan.
It is believed to be the first venture of the kind between a Western company and a former Soviet Republic to go into production.
Additionally, the U.S. mining company said it has introduced a sophisticated refining technique into the former Soviet Republic that allows for gold-extraction from ores once deemed too low grade to be destined for anywhere but the junk heap.
Zarafshan-Newmont is a 50-50 joint venture between Newmont Gold, based in Denver, and two entities of the Republic of Uzbekistan - the State Committee for Geology and Mineral Resources and Navoi Mining & Metallurgical Combine.
The Muruntau mine is one of the largest open-pit mines in the world and is located in the Kyzylkum desert, 45 miles north of the town of Zarafshan and 250 miles southwest of the Uzbek capital of Tashkent.
The venture is the largest project to be initiated in Uzbekistan since its independence in 1992 and is one of the largest Western projects in the Commonwealth of Independent States, said Newmont.
Under the joint venture, Uzbekistan now becomes the first country in the former Soviet Union where 100 percent of a gold production project will be placed in the international market.
“One of the conditions in the past was that a lot of the gold would stay in the former Soviet Union,” said Doug Hock, Newmont spokesman. “One of the conditions for this project was that all the gold would go to the international market.”
He said, however, that the Uzbeks will retain the right to purchase up to half of that gold under the same terms as other foreign bidders.
The project was the first to be financed by inside the former Soviet Union by the European Bank for Reconstruction and Development, according to Marcel DeGuire, vice president of project development for Newmont.
DeGuire said Newmont had encountered relatively few problems doing business in Uzbekistan.
“Uzbekistan is far ahead of all the other republics,” DeGuire said, noting that other U.S. ventures in the former Soviet Union have been hampered by overregulation and export restrictions.
A total of 5 million ounces of gold are expected to be produced during the 17-year life of the project, according to Newmont, which has assets of $951 million. The company said it expects the project to go into full operation on May 25, some 19 months after groundbreaking took place in October 1993.
Muruntau is the second largest gold mine in the former Soviet Union, and is comparable in size to Newmont’s Yanacocha mine in northern Peru - presently the company’s most productive foreign holding. Both Muruntau and Yanacocha are expected to produce about 450,000 ounces of gold annually.
However, the Muruntau venture is of greater strategic importance to Newmont because it is getting a larger share of the gold, company officials said.
“It looks like a big black pile of dirt,” Hock said. “The big thing is that we brought the technology to them, and this is the first gold-mining venture involving Western companies to actually go into operation.”