MAC: Mines and Communities

Kyrgyzstan: Court hands $3.1 billion fine to Kumtor Gold

Published by MAC on 2021-05-14
Source: AFP, Akipress, Reuters

A new law allows the state to temporarily take over a company due to environmental issues.

Two years after settling an investment dispute, Canada's Centerra Gold has threatened to bring a second arbitration against the Central Asian state in response to new legislation, tax demands and criminal and civil proceedings targeting the Kumtor gold mine.
The company operates three mines: Kumtor in the Kyrgyz Republic, Mount Milligan in Canada, and Öksüt in Turkey. Kumtor is the largest foreign-owned gold mine in the former Soviet Union.
Centerra was found by a court to have breached environmental laws by placing waste rock on glaciers.
See also:
2021-03-08 Kyrgyzstan bans foreign companies from future mining projects
2020-10-08 Wave of protests against foreign owned gold mines in Kyrgyzstan
2020-01-27 Kyrgyzstan: grief-stricken Kumtor mine revived
2016-05-18 Centerra Shirks Blame for Glacier Damage in Kyrgyzstan

Kyrgyz leader signs law threatening gold mine takeover


May 14, 2021

Kyrgyzstan’s president signed a law Friday that allows the government to seize control of its largest gold mine if the facility’s Canadian operator is found to have violated environmental standards.

The move comes as authorities ratchet up pressure on Centerra Gold, the Canada-headquartered miner that controls the Kumtor Gold mine by claiming the company has committed environmental and tax violations worth more than $4 billion.

Kumtor, a mine situated in the east of the country at over 4,000 metres (13,100 feet) above sea level, accounts for up to 10 percent of the threadbare national economy.

Britain and Canada on Friday issued a joint statement warning of “far-reaching implications for foreign direct investment in Kyrgyzstan” over the passage of the law and the potential nationalisation of the mine.

Centerra said last week that the law, which allows for “external management” of the mine for a three-month period, violates the 2009 agreement that governs the mine and calls legal claims against the company “entirely meritless”.

It is not clear what would happen after the end of the three-month period of external management that the government can now choose to impose.

The terms of the company’s agreement with the government allow for international arbitration of any disputes that cannot be settled in country.

The head of a state commission investigating violations at the mine announced Wednesday a claim of more than $1 billion in tax violations against the company.

That came after a court fined the company’s Kyrgyz subsidiary over $3 billion for dumping mining waste on glaciers.

Kyrgyzstan, a poor, mountainous country with few natural resources, has regularly accused Centerra, a Toronto Stock Exchange-listed company of which Kyrgyzstan owns more than a quarter, of shortchanging it over Kumtor.

President Sadyr Japarov’s sudden rise to power last October after getting freed from jail during a political crisis was particularly bad news for Centerra.

As an opposition politician Japarov led an unsuccessful bid to nationalise the mine both inside parliament and on the streets, where he oversaw several chaotic rallies against the company.

During one of these rallies in 2013 a provincial governor was kidnapped — a development that formed the basis for the 2017 arrest and sentencing of Japarov to over 11 years in jail on hostage-taking charges.

Kyrgyzstan court fines Centerra Gold mining venture $3.1 billion

Olga Dzyubenko


May 8, 2021

A court in Kyrgyzstan on Saturday imposed a $3.1 billion fine on Kumtor Gold Company, which operates the nation's biggest gold mine, after ruling that the Canadian-owned firm had violated environmental laws.

The district court decision came just a day after Kyrgyzstan's parliament passed a law allowing the state to temporarily take over a company if its activities pose a danger to human lives or the environment.

Kumtor, which is owned by Canada's Centerra Gold, was found by the court to have breached environmental laws by placing waste rock on glaciers.

The company, which has called the charges "entirely meritless", was fined 261.7 billion som, equivalent to $3.1 billion.

Centerra Gold shares plunged on Friday after parliament passed the company takeover law, as the mining firm warned that the legislation could affect its ownership of the Kumtor mine.

Kyrgyzstan has a long history of disputes with Centerra Gold over how to share profits from the former Soviet republic's biggest industrial enterprise.

The latest stand-off began shortly after Sadyr Japarov came to power in Bishkek following violent riots last October.

Japarov once campaigned for the nationalisation of the mine and set up a special commission to look into its activities once he became president.
Home | About Us | Companies | Countries | Minerals | Contact Us
© Mines and Communities 2013. Web site by Zippy Info