The Kyrgyz Republic government will review its 33% stake in Canadian miner Centerra Gold, which is at the centre of growing political debate in the country over whether to revoke its mining licence amid accusations of environmental damage. A special commission has been established to revise the Kyrgyz parliament’s share and has a deadline of October 1 to prepare a new contract with the company.  1

Some of the country’s politicians have accused the company, which operates the open pit Kumtor gold mine, of profiting excessively from Kyrgyz resources.

The criticism of Kumtor has been led by Sadyr Zhaparov, who claims in a government report the operating deal with the company is unfair, goes against Kyrgyz sovereignty and the interests of society, endangers national security and is causing irreparable environmental damage, with a series of toxic spills in past years, including a cyanide spill into a river. The damage bill is estimated at almost $4 billion.

The claims have impacted on the company’s reputation, with Centerra shares dropping to an almost three-year low.

Centerra’s president Ian Atkinson says, “The report makes a number of allegations including claims of substantial environmental damage by Kumtor. Judging from its summary conclusions, however, Centerra believes that the report’s findings are without merit.”

“The Kumtor project has been operating without interruption since 1997. The project is in full compliance with Kyrgyz laws, meets or exceeds Kyrgyz and international environmental, safety and health standards, and serves as a model for other mining projects in the Kyrgyz Republic and internationally. It has been the subject of systematic compliance audits by both Kyrgyz and international experts, who have confirmed its high level of performance.” He says the mine has generated $1.9 billion for Kyrgyzstan, including $620 million in taxes.

Centerra is 33 % owned by the Kyrgyz state gold company Kyrgyzaltyn, which is worth an estimated $1 billion. This arrangement was fashioned under former President Kurmanbek Bakiyev, who was ousted in a public uprising in 2010 and whose administration was widely perceived as being riddled with corruption. Opponents of the current licence want to see greater returns from the mine to the state.

Centerra says it remains committed to continuing to work with the government to resolve any issues.

www.centerragold.com

Resource Center Whitepapers, Videos, Case Studies

Conferences & Events

No events