China's Inroads into Kyrgyzstan's Coal Mining: Agreements & Concerns

Introduction:

Kyrgyzstan heavily relies on coal for winter heating and thermal plant operations, facing challenges in meeting the increasing demand. In response, the Kyrgyz State coal company, Kyrgyzkomur, has inked agreements with three Chinese companies to develop six major coal fields and establish a $50-million coal logistics center near the Kyrgyz-Chinese border. This collaborative effort stems from official documents signed during Li Qiang's visit, the Premier of the State Council of the People's Republic of China.

Agreements Overview:

a) Agreement with "Hebei Jinsheng MINING ENGINEERING Co Ltd Co., Ltd" for joint development of the "Tegene" coal field.
b) Joint activity agreement with LLC "Tomiris-Ken" for the development of the "Sulukta field-11" coal field.
c) Joint activities agreement with the Chinese company "Kashi Shunbaofu

d) Trade and Export Trade Corporation" for the development of the "Torugart 1" coal field.
e) Collaboration with Irkeshtan Port Xingi International Trade Co. Ltd for the Torugart and Karakabyk-Balykty areas.
f) Partnership with Shanci Soal Investment Group LLC for the Ak-Ulak area.
g) Collaboration with Shanci Soal Investment Group LLC for the Besh-Burkhan area.

Coal Logistics Centers:

"Kyrgyzkomur" and Irkeshtan Port Xingi International Trade Co. Ltd plan to construct coal logistics centers near the Kyrgyz-Chinese border, strategically located close to the Torugart checkpoint, and in collaboration with Xinjiang Dacheng Yuanlong Technology Co., LTD in Xinjiang, near Irkeshtan.

Concerns and Criticisms:

Despite these developments, concerns have been raised regarding the impact of the agreements on Kyrgyzstan. Kyrgyzkomur reveals that while licenses for all three coal fields will remain in Kyrgyzstan's ownership, Chinese investors are entitled to 70% of the extracted coal, leaving only 30% for Kyrgyzstan. Former Kyrgyzkomur director Rasul Umbetaliyev expresses dissatisfaction with this "70-30" share, proposing a more balanced distribution favoring Kyrgyzstan at 60-40. The allure for Chinese investors is attributed to Kyrgyzstan's inexpensive labor and low taxes. In contrast, Mongolia retains 70% of extracted resources for the state, highlighting a significant difference in distribution.

Mixed Sentiments and Complexities:

The people of Kyrgyzstan exhibit mixed sentiments towards Chinese investors, evident in previous disruptions to projects involving Chinese businessmen in various regions. Residents near the Solton-Sary and Makmal gold deposits have opposed Chinese involvement, as seen in incidents such as the burning down of a mining company's office in the Toguz-Toruu district. Local investors in Kyrgyzstan were also interested in developing the Tegene and Sulukta coal fields, but these opportunities were granted to Chinese companies by Kyrgyz authorities.

Debt Concerns and Geopolitical Context:

There are concerns that Kyrgyzstan may incur further indebtedness to China through these deals, although specific financial terms remain undisclosed. Simultaneously, a decline in Mongolian coal supplies to China signals China's active pursuit of alternative, reliable sources. Kyrgyzstan's coal mining operations could serve as an alternative, but questions arise about whether the rights of Kyrgyz consumers will be upheld or if the interests of Chinese companies will take precedence.

Conclusion:

As China seeks to secure its share in Kyrgyzstan's coal mining sector, this article highlights the agreements' intricacies, local concerns, and the broader geopolitical context. Balancing the interests of both nations and safeguarding the rights of Kyrgyz consumers emerge as crucial considerations in navigating this evolving collaboration.

Author: Erkinbek Kamalov