Centerra Shirks Blame for Glacier Damage in KyrgyzstanPublished by MAC on 2016-05-18
Source: Glacier Hub, Financial Post, Mining.com
An academic study recording the impacts of mining on the Daydov glacier can be downloaded for free at:- http://onlinelibrary.wiley.com/doi/10.1002/2015JF003504/full
The study used high-resolution satellite imagery (courtesy of the Digital Globe Foundation) to show significant changes to the Glacier as mining operations proceeded. An animation (quite large) showing these changes can be downloaded at: http://bit.ly/240FfEi
For previous articles on MAC, see: Environmental cost of Kyrgyzstan's gold mine
Kyrgyzstan Calls State of Emergency After Gold Mine Clashes
See also: Chile glacier laws falls short
Mining Company Shirks Blame for Glacier Damage in Kyrgyzstan
20 April 2016
The most controversial gold mining project in Central Asia is back in the spotlight again this month. Canadian mining company Centerra Gold has re-launched its public relations campaign in Kyrgyzstan to improve the company’s image over the status of glaciers at the Kumtor gold mine, one of the world’s biggest open-pit gold mines and a flagship project that accounts for 90 percent of company’s profits.
Central Asia’s Tien Shan mountain range is the site of a heated battle over gold, water, and ice, as GlacierHub has previously reported. Stretching 1,500 miles along the borders between China, Kyrgyzstan, and Kazakhstan, the mountain’s steep peaks are home to some of Central Asia’s most important glaciers, which are critical sources of water for the region.
In an April 12 statement, Centerra’s subsidiary, the Kumtor Gold Company, proclaimed: “Conditions of glaciers in Kyrgyzstan, that influence of operations to glaciers in the Kumtor area is minimal and cannot be compared to the climate change processes.”
Kyrgyz environmentalists responded to Centerra by highlighting the negative impact of mine blasts and excavation of glacier masses at Kumtor that have exacerbated ice melt at the site. Isakbek Torgoyev, director of the Geomechanics and Subsoil Resources Use Institute under the National Academy of Sciences of Kyrgyzstan, said:
The Kyrgyz Republic’s whole water fund is also made of the Petrov and Davidov Glaciers that have been formed over the centuries, and in the past these glaciers have had 700 million cubic meters of ice mass, but now, only 200 million cubic meters are left. The destruction of glaciers has created massive waste mixed with ice, acids and heavy metals which estimated at 2 billion tons. After Canadians depart, melting masses will inevitably end up in Lake Issyk-Kul and the Naryn River. Therefore, this is scary.
And William Colgan, an assistant professor in the Lassonde School of Engineering at York University, Toronto and a geologist with a specialty in climatology, has been studying glaciers and their response to global warming, told The Diplomat magazine in November in 2014:
[While] climate change is undoubtedly the main factor driving glacier retreat across the Tien Shan range, the Lysyi and Davydov glaciers are special cases because they are impacted by the Kumtor mine. These glaciers are not retreating due to accelerated surface melt alone, but also by increased ice removal at their termini. In the case of the land-terminating Lysyi and Davydov Glaciers, this ice removal is a consequence of mining activities, as the ice overburden must be removed to access ore located beneath the glaciers. The perimeter of the Kumtor mine open ice pit appears to have been excavated up glacier at greater than 30 meters per year between 1998 and 2013. Over the same period, nearby land-terminating glaciers appear to have retreated at closer to 10 meters per year. Local mining activities are clearly a larger factor in the recent wastage of the Lysyi and Davydov Glaciers than regional climate change.
Moreover, in his 2015 interview with Radio Canada International, Colgan added that, “Kumtor is not known for sharing information with the public, especially geotechnical information.”
European environmental non-profit organization CEE Bankwatch, which has extensively monitored Kumtor’s gold mine, has highlighted Centerra’s misconduct. CEE Bankwatch’s latest assessment on the Kumtor mine, after visiting Kyrgyzstan in October 2015, indicated that:
[T]he mine is a prime example of mining’s negative impact on glaciers. First and foremost, twenty years of extraction and fifteen years of dumping waste rock on top of the glaciers have caused an accelerated glacier terminus surge. In other words the glaciers are now advancing into the open pit, which is creating great challenges to the mining operation.
Nonetheless, Centerra’s powerful financial supporter, the European Bank for Reconstruction and Development (EBRD), ignored public calls for the bank’s compliance with its commitment to “high standards of transparency, environmental, health and safety conduct” and to “support the development of the Extractive Industries Transparency Initiative in the Kyrgyz Republic.” These stipulations are in line with the EBRD’s 2008 environmental and social policy, which strongly emphasizes “compliance with EU environmental standards,” and promotion of “good practices among the Bank’s clients.” EBRD is seemingly not willing to re-evaluate the bank’s environmental policies toward this mining project. Alistair Clark, EBRD’s managing director for the environment and sustainability, told GlacierHub last year in Tbilisi, Georgia that “maybe glaciers are retreating with nothing to do with mining.”
Based on the company’s estimate, Kumtor mine will be operational for another ten years. Centerra disagrees with Kyrgyz public intentions regarding modifications to the country’s water code, which would restrict the company’s practice of moving ice. “Should Kumtor be prohibited from moving ice (as a result of the purported application of the Water Code), the entire December 31, 2015 mineral reserves at Kumtor, and Kumtor’s current life of mine plan would be at risk, leading to an early closure of the operation. Centerra believes that any disagreement in relation to the application of the Water Code to Kumtor would be subject to international arbitration under the 2009 agreements governing the Kumtor Project,” the company stated in its 2015 annual report.
It is unclear how recent political developments, after yet another prime minister’s resignation in the Kyrgyzstan earlier this month, will affect Kumtor mine operations. However, the Canadian company does not seem to have reservations about threatening to abandon its cash cow project in Kyrgyzstan amid the latest reshuffle in the country’s government and ongoing political opposition to destruction of glaciers. Kyrgyzstan is scheduled to hold presidential elections in 2017; though the groups that are likely to form the new government seem inclined to support keeping Kumtor mine operations steady, the political winds may shift, and Centerra might once again face strong pressures.
Kyrgyzstan denounces Centerra directors, withholds votes again
17 May 2016
TORONTO — One of Centerra Gold Inc.’s Kyrgyz directors denounced the company at its annual meeting on Tuesday, saying there is “urgent need” for change at the management and board level.
“There are fundamental breaches of trust between Centerra and the government of the Kyrgyz Republic, which has led to instability of the Kumtor project,” Bektur Sagynov, deputy chairman at Kyrgyzaltyn JSC, told shareholders at the meeting in Toronto.
State-owned Kyrgyzaltyn, which controls 32 per cent of Centerra shares, also withheld votes for all of the gold miner’s non-Kyrgyz directors for the second straight year. It withheld votes on some directors in prior years.
The voting results ultimately did not matter, as the directors were all re-elected easily. But they highlighted how chaotic Centerra’s situation has become in Kyrgyzstan, a country that the Fraser Institute consistently ranks as one of the least stable mining locales on earth.
“It’s not viewed as a top-tier jurisdiction,” Centerra chief executive Scott Perry acknowledged at the meeting.
Last month, the company’s Bishkek office was raided by law enforcement agencies. They were seeking documents related to an apparent criminal investigation involving inter-corporate transactions. Meanwhile, Kyrgyz politicians have accused Centerra of massive environmental damage at the Kumtor gold mine, its 2016 mine plan has yet to receive full approval, and former chief executive Len Homeniuk recently told the Financial Post that he fears for the safety of employees.
Toronto-based Centerra has repeatedly denied the wrongdoing that has been alleged over the years. Regardless, Sagynov said that the public perception of Centerra deteriorates “every year” in Kyrgyzstan.
“All of this obviously points to the potential ineffectiveness and the lack of transparency in the existing management of the Kumtor project,” he said.
Centerra thought it resolved the turmoil around Kumtor back in 2009, when it struck an agreement with the government that laid out investment terms for the mine. But within months, Kyrgyzstan was unhappy with the deal and wanted a bigger piece of the overall pie. It has been pressuring the company to scrap the agreement, though negotiations for a new deal broke down late last year.
Despite the conflicts, Centerra has operated the Kumtor mine since 1997 with almost no interruptions.
Investors and analysts doubt the political tensions in Kyrgyzstan will ever go away completely. They have become accustomed to the occasional flare-ups, which are simply the cost investors have to pay to get exposure to Kumtor, an extremely rich and profitable gold mine.
Ironically, these political flare-ups also harm Kyrgyzstan itself, since they lower the value of the Centerra shares owned by the state.
Centerra recognizes that it will trade at a discounted valuation as long as nearly all of its gold output is coming from Kyrgyzstan. So not surprisingly, Perry devoted much of his presentation to the company’s diversification efforts, which he hopes will bring a positive re-rating to the stock. Centerra has development projects in Turkey, Mongolia and Northern Ontario that it hopes to bring into production in the years ahead.
Centerra Gold fined for environmental damage in Kyrgyzstan
24 May 2016
Canada’s Centerra Gold (TSX:CG) received Monday a new slap in the face from Kyrgyzs authorities after a court ruled its local subsidiary, Kumtor, will have to pay about $10,000 for environmental damage.
The decision comes less than a month after prosecutors raided Centerra’s offices in the Central Asian republic to collect documents related to a separate criminal case alleging financial violations by the firm.
The ruling is one of the latest signs of renewed tensions between the Kyrgyzstan government and the firm, which have been locked in a bitter dispute over profit sharing for over two years.
The government wants to swap its 32.7% stake in Centerra for half of a joint venture that would control the Kumtor gold mine, Kyrgyzstan's largest bullion operation, which lies near the Chinese border at an altitude of 4,000 metres.
Last year, former prime minister Joomart Otorbayev suggested a 50/50 joint venture with Centerra was not in the country's interests and rumours pointing to an imminent nationalization of the mine, later denied by Kyrgyzstan authorities, spread out.
Otorbayev resigned later that month after failing to clinch the restructuring deal. His successor, Temir Sariyev, said at the time that resolving the issue would be among his priorities.
Kyrgyzstan's environmental and technical safety authority has filed several lawsuits against Centerra’s subsidiary for a total of about $103 million, Reuters reports. Monday's ruling was just the first one of those.
The vast open pit Kumtor gold mine is expected to produce 470,000-520,000 ounces at an all-in sustaining cost between $819-$908 per ounce this year.
Centerra Gold escalates profit-sharing dispute with Kyrgyzstan to international arbitration
31 May 2016
TORONTO An ugly feud between Centerra Gold Inc. and the government of Kyrgyzstan is poised to get uglier as the Toronto-based miner has launched an international arbitration case against the state.It is the first time since 2008 that Centerra felt the need to go to arbitration, and it reflects how toxic the company’s situation is Kyrgyzstan has become.
Last week, a local court fined the company US$98.4 million over its placement of waste rock from the Kumtor gold mine. There was also a separate US$10,000 judgment against the company, and other environmental claims continue to work their way through the court.
Centerra has stated repeatedly that it has done nothing wrong, and is appealing the rulings to a higher court. But after the big fine, spokesman John Pearson said the company decided arbitration is the best option going forward.
“It’s the first time there has been a judgment like that in place,” he said in an interview.
Kyrgyz authorities hand Centerra Gold final permit to keep Kumtor mine running
28 June 1016
Canada’s Centerra Gold (TSX:CG) can finally breathe easy again as the Kyrgyz Republic approved the 2016 mine plan for the Kumtor operation, the country’s biggest gold mine.
The approval, the Toronto-based firm said, means the mine now has all the necessary permits in place for continuous operations throughout the second half of 2016.
Last week, Kyrgyzstan's authorities handed Centerra other two key permits the company had been waiting for to be able to keep Kumtor running until the end of the year.
The company and the Kyrgyz Republic have locked horns for months around the ownership structure of their co-owned Kumtor mine, the country’s largest private sector employer and taxpayer and Centerra’s main gold producing mine.
Renewed antagonism from authorities prompted Centerra to seek international arbitration to solve the impasse.
Centerra, which is the largest Western-based gold producer in Central Asia, has been actively diversifying away from Kumtor as the risks associated with the operation have proved a drag on the company’s market valuation.
The firm has been using the cash generated by Kumtor to develop projects in Mongolia, Turkey and Canada, with the goal of becoming a 1 million ounce per year producer over the next few years.
Kumtor has produced around 10 million ounces since inception and remaining reserves are 5.6 million ounces.