MAC: Mines and Communities

Kyrgyzstan: Kumtor grief compounded

Published by MAC on 2015-03-13
Source: Reuters, The Diplomat (2015-03-03)

Arguably, it's a project which should never have left the drawing-board.

Since it came on-strem in 1997, the Kumtor gold mine in Kyrgyzstan has been bedevilled with disaster; numerous claims of environmental destruction; and the endangerment of local communities.

Recently, independent investigations have found the company complicit in corruption; environmentalists have said it is guility of a tailings dam chemical spill. And the Government has been accused of using torture against community protestors.

All this would deserve international condemnation, even were the mine a Kyrgyzstan-owned venture. It is, in fact, controlled by Canada's Centrra Gold.

In February this year, the country's parliament voted 76-to-1 for the state to take over half a joint venture to control the mine - foreshadowing a possible nationalisation of Centerra itself.

But it's highly doubtful that this will provide any guarantee of such an impliciyly destructive enterprise.

It's difficult to come up with any argument that it now shouldn't be closed altogether.

Kyrgyzstan threatens to nationalise Centerra mine

Olga Dzyubenko

Reuters

27 February 2015 

Kyrgyzstan’s parliament turned up the pressure on Centerra Gold on Thursday, threatening to nationalise the Canadian company’s Kumtor gold mine unless it agrees within a month to a proposed joint venture.

The Central Asian state and the Toronto-listed company have been locked in talks for more than a year over a deal that would involve Kyrgyzstan swapping its 32.7 percent stake in Centerra for half of a joint venture that would control the Kumtor mine.

After a day of heated debates, the parliament voted 76-1 on Thursday to pass a resolution obliging the government to finalise the talks in one month.

It said that, while still negotiating with Centerra, the cabinet must also prepare a draft for Kumtor’s possible nationalisation and submit it to the legislature by March 16.

“We should finally end this epic,” parliamentary speaker Asilbek Zheenbekov said after the vote. “Today we adopted a tough resolution.”

“But we still hope that you will be able to iron out all the disputed issues, and we expect you back in one month with good news,” he told Kyrgyz government officials present. “Otherwise, we will have to begin work on nationalisation.”

Centerra Gold officials were not immediately available for comment.

Shares of Centerra Gold fell 0.8 percent, or 5 Canadian cents, to C$6.19 in opening trade on the Toronto Stock Exchange , bucking the trend of broad gains for bullion miners as spot gold prices rose.

Kumtor, which lies in a permafrost area in the Tien Shan mountains, is Kyrgyzstan’s largest gold deposit and alone accounted for 7.4 percent of the country’s gross domestic product and 15.5 percent of industrial output last year.

The open-pit mine, which is the main hard currency earner for the impoverished nation of 5.5 million, has faced several setbacks since the project was started in 1994, including threats of nationalisation, riots and more recently a $300 million ecological damages lawsuit.

The government has repeatedly rejected calls from nationalist opposition politicians to nationalise Kumtor.

But in a sign that official patience in talks with Centerra Gold was running out, President Almazbek Atambayev said in December that nationalisation could become the only option if no deal with the company was reached soon.


Kyrgyzstan's Controversial Gold Mine

Allegations of torture are only the latest scandal to be associated with the troubled Kumtor Gold Mine

By Ryskeldi Satke

The Diplomat

19 February 2015

The largest open pit gold mine in Central Asia, Kumtor’s transformation from what should have been a relatively straightforward case of foreign investment in Kyrgyzstan into a national controversy has proceeded in step with the country’s political instability of the past two decades.

Throughout the history of the Kumtor gold mine, the lead operator of the project, Canada’s Centerra Gold Inc., has insisted that it has adhered to international mining standards and to the laws of the Kyrgyz Republic. Of course, it is no secret that doing business in the post-Soviet states (with the exception of Georgia) requires discretion with respect to the corruption that is rampant in those countries. Allegations of bribery and behind-the-scenes deals involving the government are hardly news in Kyrgyzstan.

But after two violent regime changes – in 2005 and 2010 – that left scores dead, the Kyrgyz public pressed parliament to launch an investigation into Kumtor in 2012. Two Israeli-based firms were hired to lead an unprecedented probe into the gold mine, which has revealed episodes of bribery and shady deals during the first restructuring of the Kumtor project in 2003. Moreover, Muszkat Consultants and Barlev Audit have advised Kyrgyz MPs to take the case to international arbitration and to file criminal proceedings with the Canadian police. But rational action is not a hallmark of Kyrgyz politicians, and they didn’t take the advice. However, Kyrgyz prosecutors did meet with Canadian MPs and authorities in Ottawa last year to discuss the case.

Long before the first restructuring agreement with the Canadian miner Cameco (Centerra’s predecessor) in the 1990s, the Kumtor project was rocked by a corruption scandal. This occurred during the presidency of the first ruler of the republic, Askar Akayev. Suspicions arose in the Kyrgyz parliament over the awarding of the mining contract to Cameco following revelations over the involvement of a trading firm called the Seabeco Group, which had close ties to Akayev, in lobbying on the Canadian mining company’s behalf in the bidding process. A Financial Times investigative report from January 1994 indicated that the role of the Seabeco Group’s owner, Boris Bershtein in facilitating the Kumtor deal with Cameco was crucial if not major. Cameco told the Financial Times that Bershtein “did a good job in helping them arrange the deal .”

The controversy surrounding Soviet émigré Boris Bershtein was also stoked by the Israeli investigative audit. Barlev noted that Cameco hired Bershtein as its representative at a time when the latter was “head of an official Committee for the Reconstruction and Development of Kyrgyzstan.” In one bizarre episode, Boris Bershtein’s private jet ferried 1.6 tons of Kyrgyz gold to Switzerland in 1992. The incident spurred a public outcry, prompting Kyrgyzstan’s parliament to launch an investigation into irregularities. Former MP Shergazy Mambetov, who headed the probe, told Azattyk, the Kyrgyz language service of Radio Free Europe/Radio Liberty that the findings of the nine-month investigation (1993-1994) had threatened the then president’s grip on power. In the months following, the president clashed with parliament over the results of the probe, the Kyrgyz cabinet resigned, and the Parliament was ultimately dismissed.

However, the controversy didn’t end there. The initial shareholding agreement between Cameco, with a 33 percent stake in the Kumtor mine, and Kyrgyzstan, with 67 percent, was modified in a mutually agreed restructuring of the gold mine project in 2002-2003. It was decided that Centerra Gold Inc. would be set up to run the gold mine, and the Kyrgyz government would swap its majority stake with a 28.8 percent holding in the newly created Centerra Gold , with Cameco having 58.5 percent.

A report issued by Israeli firm Muszkat Consultants after a detailed investigation in 2012 concluded that the first restructuring deal was littered with dubious schemes via an offshore company Eckerd Ltd. (based in the British Virgin Islands), which was linked to the suspicious transactions involving amounts of $4 and $11 million. Both Cameco and Centerra Gold have repeatedly denied wrongdoing. Muszkat Consultants stated that the ”sums of $4 and $11 million were ‘recorded’ in such a way to justify the payments to Eckerd Ltd., an offshore company whose real owners were presumably linked to former President Akayev. These sums were in reality bribes and for money laundering.”

In its letter to the Kyrgyz Parliament, the Israeli investigative firm recommended going to international arbitration with a claim of $3.5 billion against Centerra Gold . Kyrgyz authorities did charge ten former government officials with corruption over the 2003 restructuring. However, five fled to Russia and the remaining five, although put on trial, were later released because of the statute of limitations.

Whether intentionally or otherwise, the Kyrgyz state’s dubious policies regarding the Kumtor project have had a negative effect on local communities near the gold mine, with years of neglecting the social and environmental impact of the Centerra managed gold extraction. Prior to the outbreak of Kyrgyz mass protests against Centerra, Prague based CEE Bankwatch reported that the Canadian company “has been contaminating local waters and glaciers while hiding evidence of such negative impacts from public oversight.”

Torture

The Kyrgyz government has largely ignored local grievances, prompting affected communities to stage acts of civil disobedience toward and encouraged widespread enmity towards Centerra Gold. In one episode, environmental activists from the village of Saruu quietly traveled to a guarded gold mine in July 2013 and documented the destruction of the Davidov glacier. Sweeping arrests followed during and after the protest in October 2013. Scores of community activists have been arrested and tortured by Kyrgyz law enforcement agencies. In light of these disturbing reports, Kyrgyz state ombudsman Bakyt Amanbayev visited mistreated activists in the prison and compiled video evidence of torture (here and here). Speaking with Azattyk, the ombudsman confirmed that torture had taken place and added that a complaint was filed with the Kyrgyz courts calling for an official investigation into the matter.

Despite the strides Kyrgyzstan has made on basic freedoms in Central Asia over the last two decades, the UN Human Rights Committee remains ”concerned about widespread practice of torture and ill-treatment, in particular for the purpose of extracting confessions.” The Committee Against Torture meanwhile highlighted “the failure of Kyrgyzstan to investigate fully the many allegations of torture and ill-treatment.” Out of twelve activists, four were sentenced to prison terms (4-8 years), four were given probation, and the rest were released on bail. The Kyrgyz government has failed to investigate torture cases, further degrading the country’s human rights record.

The Kumtor project has clear been a political issue since its very earliest days, and remains so today. Ultimately, the Centerra Gold controversy in Kyrgyzstan has proceeded in lockstep with the declining image of the country’s mining industry. It is quite likely that the Kumtor gold mine agreement will be reassessed once again if the country witnesses further strife.

Ryskeldi Satke is a contributing writer with research institutions and news organizations in Central Asia, Turkey and the U.S. Contact e-mail: rsatke[at]gmail.com


Dam Spill Threats at a Gold Mine in Kyrgyzstan

Posted by GlacierHub (with links & images at: http://glacierhub.org/2015/02/17/a-risk-of-a-dam-spill-threatens-a-large-gold-mine-in-the-mountains-of-kyrgyzstan/)

17 February 2015

In light of the Mount Polley tailings dam spill in British Columbia, Canada, environmental activists in Kyrgyzstan are ringing alarm bells over a possible scenario of a similar outburst at Petrov Lake near the Kumtor gold mine project. At Mount Polley, the tailings dam at a copper and gold mine burst in August last year, spilling 25 million cubic meters of toxic waste into nearby lakes. The British Columbia provincial government appointed a commission to probe into the disaster. The commission has concluded that a “dominant factor in the breach of the Mount Polley tailings dam was a failure in the dam’s foundation”. All the while in Kyrgyzstan, the main concern has been and still is the Kumtor project’s chemical waste tailings pond, managed by Centerra Gold. Coincidentally, the very same engineering firm of record for the Mount Polley dam, AMEC, was hired to investigate the Centerra Gold’s environmental record at Kumtor mine in 2013.

The most worrisome issue at Kumtor has been evolving with the stability of the glacial Petrov Lake, which is situated in direct proximity (7 km) above the tailings pond. The northwestern perimeter of Petrov Lake, where the dam is the narrowest, has become a major cause for concern in the Kyrgyz environmentalist community. The length of this particular section is approximately 30 meters. A Petrov Lake outburst could be expected to wash away the Kumtor tailings. where 60 million tons of cyanide liquid waste has been collected and stored so far. Just as in the case with the design of the Mount Polley dam, Kumtor tailings pond’s flawed feasibility has led to the instability of the dam and to seepage of toxic substances into the groundwater. The first report of the movement of the Kumtor tailings dam was recorded in 1999. And it was found that in the initial stages of the construction, the active layer of relatively unstable alluvial deposits had not been removed from the base of the tailings pond. That has made the remaining loamy interlayers (at depths of 4 to 6 meters) alsovulnerable to instability. The Prague-based group CEE Bankwatch has indicated that “in spite of measures to stabilize the dam in 2003 and 2006 (so-called shear keys and toe berm), the dam is still continuing to move.”

As this statement suggest, the company’s plans have not solved the issue of the tailings dam stability. An underlying issue is that the plans to store and manage the tailings from Kumtor did not include a hydrogeological study of the chosen location. The storage pond was built on the riverbed of the Arabel creek. It was later discovered that an old bed aquifer remained at a depth of 6.85 meters. This active bottom (underflow) is contributing to the instability of the tailings dam. Dr. Robert Moran, a hydro-geologist who visited the Kumtor mine in 2012, said that the tailings dam instability was “enhanced by the relatively high temperatures of the tailings when they come from the process plant (a highly contaminated mix of about 50% solids, 50% liquids), which would increase permafrost melting [in this high-elevation location]. Such deformation and movement of the tailings structure, combined with the partial melting of the permafrost raises concerns about a catastrophic failure of the tailings impoundment — especially if a severe earthquake were to occur [in this seismically-active region].”

Dr. William T. Colgan, a researcher with Geological Survey of Denmark and Greenland, believes that Petrov Lake presents an “additional geotechnical hazard confronting the Kumtor tailings pond”. According to Colgan’s analysis, “glacial moraine and till is often a poorly consolidated material, outburst floods from proglacial lakes due to berm breaches present a non-trivial hazard. Petrov Lake is one of approximately fifteen proglacial lakes in Kyrgyzstan for which the moraine dam has been classified as ‘at risk of rupture’ by previous researchers. The stability of the lake is important for the stability of the Kumtor tailings pond, as an outburst flood could result in failure by over topping of the downstream Kumtor tailings pond. The lake has grown in size from an area of 1.8 to 3.4 km² between 1977 and 2014. In 1957 it was just 0.96 km2 in area. This growth is due to climate change, which has enhanced both the retreat and melt of Petrov Glacier. This multi-decadal growth indicates that the volume of Petrov Lake is not in steady-state (whereby lake inflow is balanced by lake outflow), and thus the forces being exerted on moraine and till berms are likely changing over time.”

The threat of the environmental disaster over Kumtor tailings pond was highlighted at the United States House of Representatives Committee on Foreign Affairs Subcommittee hearing by Dr. Amanda Wooden (Associate Professor of Environmental Politics & Policy, Bucknell University) in November 2014. Wooden’s testimony has indicated that the “changes in the permafrost underneath this extensive tailing pit at the headwaters to the Naryn River and breach threats to Petrov Lake above the tailing pond are concerns that should be monitored”. Moran believes that in the scenario with Kumtor tailings dam failure, it would rapidly release “masses of contaminated water and sediments (the tailings) into the Kumtor river, endangering downstream people, facilities, downstream rivers, and would likely kill much of the mountain trout population and other aquatic organisms. Such a collapse could negatively-impact waters throughout much of the Naryn River basin, which flows into Uzbekistan.”

In sum, the tailings pond at Petrov Lake, with large quantities of toxic substances in an unstable glacial environment, represents a serious threat to the ecosystems and human populations in two countries. The efforts of environmental activists may serve to bring this serious risk to attention within these countries and beyond, pressing for tighter and more effective regulations.

For other stories on mining risks in glacier regions, look here and here.

Author information:

Dinara Kutmanova: PhD in Environmental Law from Kyrgyz State Law Academy; leading environmental expert and member of the Kyrgyz State Commission probe into Kumtor mine operations in 2012-2013: co-chairman of the Green Party of the Kyrgyz Republic.

Ryskeldi Satke: contributing writer with research institutions and news organizations in Central Asia, Turkey and the U.S. Contact e-mail address: rsatke at gmail dot com


European Environmental Team Harassed in Kyrgyzstan

Once again the Kumtor gold mine produces controversy.

By Ryskeldi Satke

The Diplomat

22 October 2015
 
Kyrgyzstan’s “foreign agent” frenzy, actively supported by Russia, involved the Kyrgyz state security service (GKNB) this month after Prague-based environmental NGO CEE Bankwatch traveled to the site of protests against the Kumtor gold mine project operated by Canadian mining company Centerra Gold.

In 2011, Bankwatch investigated the impact of the gold mine on glaciers in Kyrgyzstan and in its report noted that transparency and “compliance with environmental and social standards” remained a concern. Following its initial observation, CEE Bankwatch visited the Kyrgyz Republic this month after multiple reports of human rights violations during the anti-mining protests in 2013. On October 5, GKNB agents harassed and intimidated the Bankwatch team in the provincial town of Karakol, within driving distance of the Kumtor gold mine. Initially, the agents checked passports for possible visa irregularities, but it became clear after hours of questioning that the GKNB wasn’t concerned with Bankwatch team’s status in the country; rather, they were interested in the purpose of the NGO’s trip to the area near Kumtor gold mine.

Facing immense pressure to leave, the Bankwatch team was unable to meet with local community members, Kyrgyz NGOs, and public figures in Isyk Kul province. Harassment and intimidation of CEE Bankwatch representatives in the form of aggressive tailing by GKNB continued throughout the duration of the European organization’s stay in Kyrgyzstan.

It is unclear why the Kyrgyz government employed state security apparatus resources against an independent environmental organization, but the Kumtor project has become highly politicized and hotly debated in the country in the last five years. Reports of torture and repression against environmental activists following mass protests in 2013 against Centerra Gold and the Kyrgyz government’s mining policies reignited domestic debate. However, the government’s approach to resolving tension in the villages near Kumtor mine remains counterproductive.

Attacks on Kyrgyz environmental activists in areas near Kumtor have become a concern in the last three years. In one episode, Daniyar Bolturukov, head of the local Public Board that oversees the provincial development fund that is financed by Centerra Gold, told CEE Bankwatch that he was kidnapped by local mob group members and beaten for hours. Bolturukov says the kidnappers threatened to kill him, forcing him to denounce on video his critical statements about Kumtor company. Daniyar believes that the attacks against him were orchestrated by the Kumtor mine management. Asked if he was able to seek help from the local law enforcement, Daniyar said that the Kyrgyz police and courts have lost credibility, and he felt unable to file a police report. He added that he had a medical report after the last attack.

Similar incidents occurred in the village of Saruu, which was at the center of mass protests against the mining project. In 2013, community activists were kidnapped and attacked, while violent police raids have left residents of the village in fear. On one occasion, in October 2013, Kyrgyz special forces with air support attempted to storm Saruu. According to local villagers, more than a thousand residents formed a blockade to protect the village. Since then a number of Saruu community leaders and activists have been imprisoned, while more await trial.

Toronto-based Centerra Gold denies involvement in the local conflict while declining to meet and discuss the issues with CEE Bankwatch and local community activists. Kumtor refused to meet with Bankwatch representatives in Kyrgyzstan, suggesting that they communicate in writing with Centerra’s headquarters in Canada.

The Canadian company is facing similar protests in Mongolia, where it is gearing up to open another gold mine, Gatsuurt, with Mongolian activists protesting Centerra’s environmental record at Boroo Gold project and potential damage to ancient burial sites in Mount Noyon. While Centerra remains recalcitrant, its record in Kyrgyzstan and Mongolia is having repercussions for the global image of the Canadian mining industry.

Ryskeldi Satke is a writer with news organizations and research institutions in Central Asia, Turkey and the U.S. Contact e-mail: rsatke at gmail.com.

 

Home | About Us | Companies | Countries | Minerals | Contact Us
© Mines and Communities 2013. Web site by Zippy Info