MOSCOW, Aug 20 (AFP): As US gold giant Newmont battles to save its operation in the deserts of western Uzbekistan, instability and threats against personnel are making much of Central Asia a no-go area for normally hardnosed prospectors.
Uzbek authorities said this week they had launched bankruptcy proceedings against a joint venture between the state and Newmont Mining, more than a decade after the 1995 launch of the project was hailed as a landmark in US cooperation with the ex-Soviet nation.
"This has shocked a lot of people-this is a really serious dent" in Uzbekistan's reputation as an investment destination, an informed observer said, adding that he doubted Uzbek authorities would be willing to put in funds for the project to realise its full potential.
Newmont last year sold 123,000 ounces of gold from the Zarafshan-Newmont joint venture, which processes gold from the neighbouring Muruntau open-pit mine in the Kyzylkum desert, 250 miles (400 kilometres) west of Tashkent.
But this June the government annulled tax privileges for a handful of major foreign investors including Newmont and a court subsequently ordered the joint venture to pay 48 million dollars (38 million euros) in back taxes.
In a development reminiscent of the dismemberment of Russia's Yukos oil company, Newmont said this month that Uzbek authorities had launched criminal investigations against staff of the venture, prompting expatriate staff to flee the country.
An official from the anti-monopoly committee has been put in charge of operations at the venture, the company said.
Newmont has described these moves as an attempt to "expropriate" its stake, which it estimates is worth 94 million dollars (71 million euros).
"It makes investment (in Uzbekistan), which was already becoming more and more difficult for foreign companies, prohibitive," the informed observer said.
The action against Newmont comes amid a clampdown on Western investors resulting from a deterioration in political relations between Tashkent and the West.
An Uzbek government source told the news agency this week that another foreign metals investor, London-based Oxus Gold, had been excluded from developing the Khandiza reserve in the southeast of the country, which contains zinc, silver, copper and lead.
Media reports said that development rights would be awarded to a local venture rather than Oxus' subsidiary Marakand Minerals, which had been exploring the reserve.
Meanwhile, Oxus is among a number of foreign metals companies that have run into trouble in Uzbekistan's neighbour Kyrgyzstan, where gold represents a major chunk of the national economy.
Last month Oxus said that its representative in Kyrgyzstan, Sean Daley, had been shot and injured in an assassination attempt in the Kyrgyz capital while he was negotiating for the return of the licence to the Jerooy gold project in the northwest of the country.
Kyrgyz authorities stripped Oxus of the licence in 2004, a decision Oxus is still hopeful of reversing, a company spokesman in London told newsmen.