Uzbekistan Launches Bankruptcy Against U.S. Mining Venture

Authorities in Uzbekistan have launched bankruptcy proceedings against a joint venture of Newmont Mining, a report said Aug. 16, in a move the U.S. company condemned as expropriation. State creditors of the Zarafshan-Newmont Joint Venture (ZNJV) will meet on September 19 to discuss the company's tax debts, said a statement from the anti-monopoly committee published in the government-run newspaper Narodnoye Slovo.
An official from the anti-monopoly committee in this Central Asian state has been put in charge temporarily of operations at the venture, the statement added.

The open-pit mine, one of the largest in the world, was once the biggest gold producer in the Soviet Union and is a key foreign currency earner for Uzbekistan. Last month, Newmont said it might consider selling its 50% interest in the joint venture, worth about $94 million, after a court ruled it should pay $48 million in unpaid taxes and fines from 2002-2005.Government groups own the other 50% of the venture.

The company, whose gold shipments were frozen and assets seized by Uzbek authorities earlier this month, has said it will appeal against the tax ruling. "The company believes that these investigations are part of an effort to apply undue pressure and effectively expropriate the company's interest in ZNJV," a Newmont statement said. But "if the Uzbek authorities continue to restrict the shipment of gold, ZNJV will be unable to make the payments necessary to maintain normal operations," it said.

Newmont sold 122,700 ounces of gold produced by the Uzbek venture last year. Uzbekistan is one of the world's leading exporters of gold.Newmont said the mine, employed 900 people and had benefited Uzbekistan to the tune of$500 million since it began operations.

Copyright Agence France-Presse, 2006

TAGS: Regulations
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