Gold and Silver

Kyrgyzstan to temporarily take over Centerra’s Kumtor mine

Kyrgyzstan to temporarily take over Centerra’s Kumtor mine
Mining News Pro - Lawmakers in Kyrgyzstan, home to major gold and copper mines, have passed a bill allowing the state to temporarily seize Centerra Gold’s (TSX: CG) Kumtor mine, the largest gold operation in the Central Asian nation.
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The legislation, passed late on Thursday, allows the government to run Kumtor for up to three months. It is based on the belief the operation may pose danger to locals and the environment.

Canada’s Centerra said in a media statement that Kumtor, which accounts for a fifth of the ex-Soviet country’s total industrial output, adheres to international environmental standards.

It also said it “believes strongly” the claims against it are without merit.

The mine has produced more than 13.2 million ounces of gold between 1997 and the end of 2020. Last year’s output was slightly over 556,000 ounces.

In February, the country formed a commission in charge of reviewing the operation as the state Tax Service revived previously-dismissed claims against Centerra.

The revenue agency alleges the Toronto-based miner owes more than $170 million, which could made it subject to penalties or sanctions.

Centerra has said the 2009 restated project agreements which govern the Kumtor mine contained a specific tax and fiscal regime. This states that no taxes are payable by its local unit Kumtor Gold Company (KGC) on intercompany transactions with Centerra, including dividends.

Mounting issues
The company is also facing a civil suit against the operation, requesting that its past practice of placing waste rock on glaciers be determined illegal. The claimants are demanding over $3 billion in environmental damages in favour of Kyrgyzstan, Centerra said.

The gold miner noted it was committed to continue working with Kyrgyz authorities to resolve any outstanding issues in accordance with existing contracts.

Kumtor has been the focus of a number of disputes between the company and the Kyrgyz government.

President Sadyr Japarov, who seized power after violent riots last October, once campaigned for the nationalization of the mine. After assuming the post, however, he said he no longer considered it necessary.

Kyrgyzstan has a history of popular uprisings and political turmoil, ever since gaining its independence after the collapse of the Soviet Union in 1991. Protesters had ousted two prior PMs in revolutions in 2005 and 2010.


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