Sergei Oposhnyansky, Yevgeny Khokhlov

Nikolai Kuchersky, General director of the Navoi Mining-and-Metallurgical Complex (NMMC)

Ten years ago the corporation Newmont Mining set up in Uzbekistan a JV, its first one in the post-Soviet space. Since then Zarafshan-Newmont JV, which processes waste dumps of the gold-mining open pit Muruntau by using the technology of heap leaching, produced 100 tons of gold. Chairman of the board of directors of Zarafshan-Newmont, general director of the Navoi Mining-and-Metallurgical Complex (NMMC) Nikolai Kuchersky highly appreciates the international business partnership in gold mining. Its prospects look good to him.

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e marked May 1, 2003 as an important event of producing the first 100 tons of gold by Zarafshan-Newmont JV", said Nikolai Kuchersky to reporters from Eurasian Metals. And he immediately corrected himself noting that on that day the total production volume already reached 104 tons, not 100 tons. "The work is going on, figures are constantly growing, the enterprise is exceeding design levels both by volume and quality of extracted gold", he added.
NMMC, which also operates at the Muruntau field, gets obvious advantages from cooperating with Newmont Mining. The Uzbek participant receives annually $25M as dividends and payments for selling off-balance ore. The American side also gets its share of profit and, besides, it benefits from the exchange of experience. In the words of Kuchersky, although specialists went through different schools of training, professionally they reached a complete mutual understanding. To their surprise the personnel from Newmont unexpectedly found in far-away Central Asia a modern mining production facilities. They paid much attention to and were interested in scientific achievements of NMMC. As is reported, now they are trying to apply them at other enterprises owned by the corporation.

Zarafshan-Newmont JV, Uzbekistan’s first enterprise with participation of foreign capital, has been successfully operating already for 10 years

"So, the first project with participation of foreign investors undertaken in independent Uzbekistan justified itself completely demonstrating high work efficiency and reliability", stresses Nikolai Kuchersky.
The recent times were the most favorable period for the gold-mining industry. In 2002 the world production of gold went down significantly due to shutdowns of a number of open pits and reduction of ore-mining volumes. The director of NMMC directly connects it with the price situation of the previous years. "It was known beforehand that with the price lower than $300 an ounce many companies would not be able to maintain a necessary level of production profitability. Events proved it. Thousands of enterprises went broke and just stopped to exist". However, Uzbekistan, in his words, safely went through this difficult period. "We have not only kept our volumes of production but we are building them up", says the head of the largest gold-mining enterprise. In 2002 NMMC together with Zarafshan-Newmont, which uses the NMMC’ raw material base, produced as much gold as the whole republic did 5 or 6 years ago.
The gold-mining industry plays an important role in Uzbekistan’s economy and it gets all possible support from the State. The country’s government interested in increasing foreign investments proposed the whole number of other promising projects similar to the first JV.
To give an example Nikolai Kuchersky refers to the joint venture Amantaytau Goldfieds set up with participation of Oxus Mining Plc. (the U.K) (Oxus owns a 50% stake, the state structure Goskomgeology has a 40% stake and 10% belong to NMMC). The basic strategic principles have been agreed upon with Israel’s Metal-Tech with respect to the project forming a mining-and-metallurgical complex based on fields of tungsten, silver and gold in the region of the city of Uchkuduk. The Bateman Group is participating in implementing the second phase of the Uchkuduk mining-and-metallurgical complex for producing and processing gold sulfide ores. Foreign companies are very much interested in the project to develop the gold field not far from the city of Angren. Among those companies, which wanted to take part in a tender for the right to develop it, was the Barrick Gold Corp.: in Kuchersky’s words, the corporation even appealed for support in this respect.
Today, the heightened interest of investors in Uzbekistan’s gold is reinforced by the growth of world prices for this metal. If between 2000 and 2001 one troy ounce cost from $250 to $270, in the first half of this year the price has already risen several times, up to $370. It has even reached $385 once. Kuchersky regards these prices as not only beneficial but fair as well. "Recently NMMC’ products and system of test control were successfully re-certified in London: the arbitration laboratory LBMA again proved the reputation of our gold as the purest in the world. We are quite satisfied that at long last this product is duly appreciated in the market".
Thanks to the growth of prices for gold, Uzbekistan has started getting more currency inflows and the investment attractiveness of NMMC has grown. Additional funds went to further develop production, including the purchase of a more powerful mining equipment. Nikolai Kuchersky informed of new contracts totaling $30M, under which Terex Germany GmbH is supplying to NMMC two excavators with the bucket capacity of 26 cubic meters and Caterpillar is providing it with ten pit dump trucks with the carrying capacity of 190 tons. There were successful negotiations with Eximbank (the U.S.) and Berlinbank (Germany) on opening up a credit line of $200M to build a mining-and-metallurgical complex on the basis of two gold-ore fields Kokpatas and Daugyztau. "Today we are producing here 5 tons of gold a year but in two years we will be able to mine 20 tons", Kuchersky says with confidence.
These fields contain obstinate sulfide-arsenate ores to work with. Gold will be mined under the BIOX technology provided by the Bateman Group. But since this method itself still does not permit to reach production profitability, it will be supplemented with preliminary mechanical cleaning. This technology was developed by specialists from NMMC and it has already been successfully tested.
"Last October we put into operation at Kokpatas the experimental-industrial ore-picking complex with capacity of 1 million tons of ore", tells Nikolai Kuchersky. "The design parameters indicated: preliminary mechanical cleaning permits to increase the content of gold in oxide-bearing ores by 1.5 times. But we went even further. A new scheme of processing mixed ores has already been tested. And in this case the ore-picking proved to be good". In the opinion of Kuchersky, the new enterprise based on large gold reserves will be economically effective operating precisely along with the ore-picking.
But will it be possible to maintain the profitability, if prices for gold fall down again? Kuchersky insists that even with the price for gold equaling $250 an ounce the enterprise Kokpatas-Daugyztau will stay profitable. And the whole gold-mining complex NMMC, including the Muruntau open pit, will still be bringing profit even with the price of gold amounting to $230 an ounce.
It is noteworthy that the Navoi Mining-and-Metallurgical Complex is skilful enough so as to maintain a low prime cost of gold mining, although its business operations are overburdened with large unspecialized assets. So far the management of NMMC does not intend to get rid of such assets and do not plan to cut down nonproductive expenses.

Installation for preliminary mechanical enriching of base ores. NMMC is making a big stake on this technology

"Do not forget that our enterprises are located in the Kyzyl-Kum desert", reminds Nikolai Kuchersky. "These specific peculiarities do not permit us to limit ourselves to just mining gold, uranium, phosphorites and stop doing everything else as being "unspecialized". Take, for example, the leading daily function like bringing foodstuffs to towns, where our workers are living. They are separated by hundreds of kilometers. There is a need for a lot of specially equipped machinery, refrigerators, cold stores. Not a single commercial structure can afford to keep such complicated facilities. That means that we can not transfer this task to the market".
In the words of Nikolai Kuchersky, maintaining a high production efficiency is possible because of innovations. "The highly productive machinery at our mines, new technological installations at the hydrometallurgical plants allow to sharply increase the rate of use of capacities", he says. NMMC intends to significantly modernize technology at its main enterprise, i.e. the Muruntau pit. It has already ordered a complex of equipment for high-angle conveyers, which will permit to carry out developing the field at a depth down to 800 meters and, possibly, even to 1 km. The supplier is the Novo-Kramatorsk Machine-Building Plant (NKMZ, Ukraine). This is CIS’ one of the largest producers of equipment for metallurgy and mining production and NMMC has the long-standing partnership relations with it. "Whatever our competitors may say, I think that the NKMZ-made spoker is the best in the world", says Kuchersky. "Having partners like this we, of course, will be able to create a complex of high-angle conveyers for gold mining. And in the future this technology will allow us to do open-cast mining also at other fields, where deep open pits need to be constructed".
NMMC is planning to raise gold mining through the whole number of facilities, which were transferred to its management in May 2002: the Mardzhanbulak open pit with the gold-extracting mill, the promising gold-ore field Guzhumsai with estimated reserves of hundreds of tons of gold, the Karakutan pit that is developing a group of small gold-ore fields. "We raised these enterprises literally from ruins and brought up to the level of normal operation. They now started to produce as much gold as they did in their best years", says Nikolai Kuchersky.
Also last May NMMC was handed over the Zarmitan mine. There is a project under consideration now to set up on its basis a JV with participation of Australia’s Multiplex. According to the preliminary estimates, the enterprise’s annual productivity in mining and processing gold-containing ore will reach 1 million tons. It should achieve the full capacity in 2006. The complex of technologies for preliminary enriching of ores and deep gravitational extraction of gold has been implemented with the participation of the companies Integra and Intertech. It is believed that these methods will allow to upgrade engineering and economic level of the enterprises.
Strategic decisions are also being made with respect to other gold fields on the republic’s territory. All this makes Nikolai Kuchersky optimistically predict: "Our gold-mining industry is on the rise and in the coming years a rapid upsurge of gold mining is expected in Uzbekistan".