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British gold miner accuses Uzbekistan of trying to steal JV assets

Lawyers for a British gold mining company said Uzbekistan authorities are waging a smear campaign in a bid to steal the company’s half of a lucrative joint venture.


July 11, 2011
by CANADIAN PRESS

ALMATY, Kazakhstan: Lawyers for a British gold mining company said Uzbekistan authorities are waging a smear campaign in a bid to steal the company’s half of a lucrative joint venture.

Robert Amsterdam, who represents Oxus Gold PLC, said in a statement that the company’s state-run partners have concocted stories of alleged violations of environmental standards as a way of forcing the joint venture into liquidation.

Oxus has a 50% interest in the Amantaytau Goldfields (AFG) venture, where some of the world’s most promising fields are being developed, while Uzbek authorities own the remaining half through two state-owned entities. Uzbekistan is the world’s ninth largest producer of gold, which brings in some 20% of its export revenue, according to the US State Department.

Uzbek authorities this year initiated an audit that Oxus said was being used to squeeze the company out of the venture.

In a new escalation of tensions, AGF’s state-owned stakeholders last month accused Oxus of failing to live up to its investment obligations, introduce new equipment and putting workers’ lives at risk by disregarding safety standards.

Amsterdam dismissed those charges and said Oxus has implemented an environmental plan that far exceeds local regulations.

“In most countries, these false allegations would be the source of jokes, but the Uzbek officials are shamelessly motivated by their desire to steal a profitable foreign investment,” he said.

Amsterdam said that as well pursuing bogus tax claims, Uzbek authorities have subjected Oxus to a campaign of bureaucratic harassment and jailed a senior technician in the company on fabricated spying charges.

“This kind of conduct effectively holds Oxus hostage. The international business community should take note of what happens to foreign investors who achieve success in Uzbekistan,” he said.

Amsterdam, who is representing Oxus in an international arbitration case against Uzbekistan, says the government’s treatment of the company has cost it more than $400 million.

Oxus operations are focused on Uzbekistan, where it has been operating since the mid-1990s. The company estimates reserves at sites being developed by AGF at 2.8 million ounces of gold and 6.7 million ounces of silver.

Several partly foreign-owned ventures were liquidated in Uzbekistan in the past. The government was quick to buy them up at what market observers consider below-market rates.

Uzbek officials say they were willing to part ways with Oxus on amicable terms, but adds that the British miner has resisted all overtures and insisted on trying to sell its assets to another foreign company.
© 2011 The Canadian Press