Centerra Gold battles Kyrgyz bureaucracy

By David Trilling

Kyrgyzstan’s largest industrial enterprise, the Canadian-operated Kumtor gold mine, says it will stop production next week if the Kyrgyz government does not approve the necessary work permits. The announcement, which sent the company’s stock plummeting to its lowest point this year, comes less than a month after a rancorous board meeting where Kyrgyz representatives complained their Canadian partners ignored their decisive vote on the company’s management structure.

Toronto-listed Centerra Gold, which is one-third owned by Kyrgyzaltyn, the Kyrgyz government’s state-owned gold company, says its has worked since late 2013 to secure the necessary mining and environmental permits and approval of its 2014 action plan.

“Unfortunately, this year, despite repeated submissions and discussions with senior officials, such approvals and permits have not been provided. The continuing absence of such approval and permits creates significant uncertainty and risks for Centerra and its employees,” the company said in a June 2 statement.

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Centerra and Kyrgyzstan try to settle

By David Trilling

Kyrgyzstan’s government has reached yet another possible restructuring plan with Toronto-listed Centerra Gold, which owns the country’s largest and most profitable mine. But the non-binding agreement must still be ratified by Kyrgyzstan’s self-serving parliament, which rejected a strikingly similar plan in October.

The high-altitude Kumtor gold mine is the largest industrial asset in the impoverished Central Asian nation, account for approximately 12 percent of GDP in a good year and over 50 percent of industrial output.

Restructuring negotiations, which would lead to the fourth operating agreement since Canadian miners started developing the Kumtor deposit in the mid-1990s, began after parliament voted in February to tear up a 2009 agreement, maintaining it was not in the interests of the country. Centerra countered that it has invested approximately $1 billion in the mine since signing that contract. Few believe Kyrgyzstan has the technical know-how to operate the project on its own.

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Kyrgyzstan rejects Canadian miner deal

RIA Novosti

Kyrgyzstan’s lawmakers overwhelmingly rejected Wednesday a new deal to settle Bishek’s long-standing dispute with the Canadian operator of the country’s biggest goldmine.

The Kumtor mine, one of the largest in Central Asia, has for the past year been at the center of a tussle between Toronto-listed Centerra Gold and Kyrgyzstan, which has fought to boost its control over the project.

Just two of 120 lawmakers voted in favor of a memorandum of understanding with Centerra, reached in September, under which Bishkek would swap its 32.7 percent stake in Centerra for a 50 percent interest in a joint venture. Under the agreement, the Canadian firm would remain the operator and manager of the mine, and would also receive $100 million, Centerra said last month.

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Canadian miner targeted in shakedown

Kumtor Operating Company, which is owned by Toronto-listed Centerra Gold, said the company has been “constantly receiving threats of possible road blocks in the event of non-compliance with various kinds of demands.”

By David Trilling

Kumtor gold mine in Kyrgyzstan

Kumtor gold mine in Kyrgyzstan

For years industry observers have asserted that environmental protests outside the Canadian-run Kumtor Gold Mine in Kyrgyzstan’s eastern mountains were part of an elaborate shakedown scheme. Now a video has emerged that appears to substantiate this view.

Kyrgyzstan’s State Committee on National Security (GKNB) announced the opening of a criminal investigation after the video appeared on state television 28 August, purporting to show two men who had previously voiced environmental concerns demanding $3 million from a Kumtor representative in exchange for an apparent guarantee not to orchestrate protests. The video purportedly has a time stamp of 31 July.

The video’s appearance on state television suggests that central government officials in Bishkek are intent not only on solidifying their hold on power, but also want to forge a stronger working relationship with Kumtor’s operators, and, more broadly, boost foreign-investor confidence shaken by regular mining-related riots. GKNB representatives declined to address the video’s provenance.

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Kyrgyzstan outlines gold mine restructure

Toronto-listed Centerra Gold engaged in long legal dispute

By David Trilling

As officials in Kyrgyzstan prepare to negotiate with their country’s largest investor in Bishkek this week, new details are emerging about how the Kyrgyz government wants to restructure the agreement covering operations at the country’s flagship gold mine.

Bishkek and Toronto-listed Centerra Gold are engaged in a protracted legal dispute over Kumtor, the largest gold mine operated by a Western company in Central Asia. Earlier this year, a Kyrgyz state commission claimed Centerra owes approximately $467 million for environmental damages. Then, in February, parliament gave Kyrgyz officials three months to negotiate a new operating agreement, which would be the third in 10 years.

Kyrgyz officials say the current agreement, negotiated under former president Kurmanbek Bakiyev in 2009, shortly before he was ousted amid violent street riots, was unfair. The company, which also operates a mine in Mongolia, argues that it negotiated in good faith with what was at the time the legitimate government, and has threatened to seek international arbitration. It calls the $467 million claim — which other miners in Bishkek say is a negotiating tactic — “exaggerated or without merit.” Centerra officials also point out that the agreement gave the company confidence to invest almost $1 billion in the mine since 2009.

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Kyrgyzstan gold mine auction stumbles

By David Trilling

Kyrgyzstan’s efforts to attract investors by auctioning off mining licenses, starting with the country’s second-largest gold deposit, have run into problems — both self-inflicted and beyond authorities’ control.

The ailing Kyrgyz economy is desperate for investment, with the country’s leaders eager to put years of social unrest behind them. But would-be investors have plenty of reasons to fear: in February, the government voted to scrap the existing agreement with the country’s largest investor, a Canadian gold miner. A number of foreign exploration projects have faced violent attacks in recent years by locals feeling they do not benefit from the country’s mineral wealth. And this week gold suffered its worst two-day slide in 30 years, sending convulsions through the industry. Market analysts had predicted declining gold prices, but the plunge beat even the gloomiest forecasts.

Jerooy, with an estimated 84 metric tons of gold, is supposed to be a fresh start, signaling that Kyrgyzstan is open for business. It is also a test case, one that potentially sets an example for other gold and marble mines that possibly could come up for auction later this year, according to officials at the State Geology Agency. A tender starting at $300 million opened on April 5; bidding closes on May 10.

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Canadian miner opposed in Kyrgyzstan

Nationalists threaten to return to the streets to topple another government unless it expropriates the Centerra’s Kumtor gold mine

The Guardian (UK)

In an impoverished young nation with a habit of overthrowing its rulers, the future now balances on a mountain of gold at the top of the world, where the air is so thin collapsing visitors may be rushed to a pressure chamber for oxygen.

After two revolutions in eight years, nationalists in Kyrgyzstan are threatening to return to the streets to topple another government unless it expropriates the Kumtor gold mine, a treasure they say was sold off too cheaply to foreigners.

Parliament in the remote ex-Soviet central Asian state has set a deadline of 1 June for the government to renegotiate — or repudiate — a deal struck in 2009 with Canadian firm Centerra Gold to operate the mine.

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Centerra Gold faces half-billion dollar fine

By David Trilling

Temir Sariev, Kyrgyzstan Economics Minister

A state commission in Kyrgyzstan has used claims of environmental damage at the country’s largest, most lucrative gold mine, Kumtor, to argue for a new agreement with the company operating the mine, Toronto-based Centerra Gold, and to fine Centerra almost half a billion dollars.

Economics Minister Temir Sariev, who headed the commission, says he has evidence, including two reports by European scientists, that the mine is inflicting “colossal damage” on the environment.

But, until now, hardly anyone in Kyrgyzstan has seen those scientists’ supposedly damning reports.

In December and February the commission, acting, respectively, through two state agencies — the State Inspectorate for Environmental and Technical Safety (SIETS) and the State Agency for Environmental Protection and Forestry (SAEPF) — fined Centerra approximately $467 million for alleged environmental damages, waste disposal and water treatment violations dating back to 1996. Centerra calls the claims “exaggerated or without merit.”

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Foreign miners’ troubles in Kyrgyzstan

Kyrgyzstan government is pushing to renegotiate terms with Canadian company Centerra Gold. See also March 5 post, “Centerra Gold risks Kyrgyzstan collapse” and February 27 post “Gold mining in the Stans”.

The Economist

A gravel road winds up in snowy switchbacks, past the tree line, to a model of efficiency rare in this impoverished Central Asian nation. At the gate, 4km (13,000 feet) above sea level, busloads of workers have their bags X-rayed for booze coming in or nuggets going out. Since 1997 they have pulled about 270 tonnes of gold from an open pit in the Tian Shan mountains near the Chinese border. In a good year the Kumtor mine accounts for 12% of Kyrgyzstan’s GDP and half of its exports, while contributing nearly a tenth of the national budget.

Yet getting gold out of Kumtor is a pain, and not because of the high remoteness. Rather, Kyrgyzstan’s troubled politics holds back Kumtor and helps explain why foreign-run mines are so rare in a country brimming with gold and many other mineral deposits.

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Centerra Gold risks Kyrgyzstan collapse

Centerra Gold is a Canadian-based gold mining and exploration company engaged in the operation, exploration, development and acquisition of gold properties in Asia, the former Soviet Union and other emerging markets worldwide.

By Fozil Mashrab
Asia Times

Ian Atkinson, Centerra CEO

A legal dispute between the Kyrgyzstan government and Centerra Gold has entered a decisive stage for both sides after the Kyrgyz parliament instructed the government either to renegotiate a 2009 deal with the Canadian mining company or withdraw its mining license, though Kyrgyz Prime Minister Jantoro Satybaldiev recently ruled out any steps to nationalize the mine.

The parliament’s instruction came in a February 22 resolution as Kyrgyz officials said that the previous deal between Kyrgyzstan and Centerra gave away overgenerous tax waivers and made other unnecessary concessions. Temir Sariev, the country’s economy minister, has said that the deal allows Centerra to pay 12% tax on its revenues while other mining companies in the country are required to pay a rate of between 17% to 20%. The 2009 deal was signed during the presidency of Kurmanbek Bakiev, who was ousted in a popular revolution in April of the following year.

Centerra has operated the Kumtor mine since 1993 through Kumtor Gold, a wholly owned subsidiary. Kumtor is one of the largest gold mines in the world, located in the Issik Kul region of Kyrgyzstan. Kumtor, which produces around 2 tons of gold a year, accounts for 12% of the country’s gross domestic product (GDP) and for about 50% of its exports. The mine is the largest taxpayer in the country.

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