RISKS AND OPPORTUNITIES FOR FOREIGN-INVESTMENT IN THE MINERAL SECTORSOF THE CENTRAL-ASIAN REPUBLICS - KAZAKHSTAN, KYRGYZSTAN, TAJIKISTAN AND UZBEKISTAN

With the dissolution of the former Soviet Union in 1991, the nations o f Central Asia gained independence and began the transition to market driven economies. Both the political and economic transformations of t he Central Asian Republics (CARs) (Kazakstan, Kyrgyzstan, Tajikistan a nd Uzbekistan) have been difficult primarily because of a holdover of various centrally planned 'command and control' approaches to national development. The extensive mapping and exploration of the CARs during the Soviet era (approximately 1921-1991) led to the discovery of seve ral hundreds of mineral deposits that were subsequently evaluated, and it is this 'pool' of known, but undeveloped, deposits which is of maj or interest to foreign and domestic companies. However, foreign invest ment in the mineral sectors of the CARs is at best quite modest and th ere are very few positive signs that foreign investment will increase dramatically in the near term, The major risks that the mining industr y faces as it works in the CARs arise primarily from the fact that the nations are transitional economies which lack both a comprehensive le gal framework and experience in dealing with foreign mining corporatio ns and their practices. The major risks are political, economic, finan cial, infrastructure, contractual, environmental, social and cultural and workforce related. If ail individual risk factors are weighted equ ally, the relative ranking of the countries (from least risk to most r isk for mineral development) would be Kyrgyzstan, Kazakstan, Uzbekista n and Tajikistan respectively, However, such a classification scheme d oes not effectively weight the importance of mineral potential. If the risk criteria are weighted with respect to geologic potential, the ra nking of the countries would be (from least risk to most risk) Kazakst an, Uzbekistan, Kyrgyzstan and Tajikistan, respectively, (C) 1998 Else vier Science Ltd. All rights reserved.