Standoff between Kyrgyzstan and Centerra over Kumtor continues

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BISHKEK (TCA) — Canada-based Centerra Gold, which is developing the Kumtor gold mine in Kyrgyzstan, has reported on more legal proceedings in Kyrgyzstan and restrictive measures imposed by Kyrgyz courts and state authorities on Centerra’s Kyrgyz subsidiaries and senior management personnel.

Centerra said on June 6 that Kyrgyz authorities had launched a probe against managers of its Kyrgyz subsidiary, Kumtor Gold Company (KGC), accusing them of abusing their authority and engaging in transactions that deprived Kyrgyzstan’s largest gold mine, Kumtor, of its assets.

Centerra said that, upon the instruction of the General Prosecutor’s Office of Kyrgyzstan, several of KGC’s senior expatriate managers have been advised by the Kyrgyz Republic border service that they will not be permitted, for the time being, to leave the Kyrgyz Republic.

“Such measures, together with other actions taken by Kyrgyz Republic courts and state authorities previously reported on by the Company, are clear breaches of the agreements governing the Kumtor Project and, in aggregate, threaten to deprive Centerra of its fundamental rights to exercise effective management control over, and enjoy the economic benefits of ownership of, the Kumtor Project,” the Canadian company said.

Centerra says it has initiated international arbitration proceedings to challenge the Kyrgyz Republic’s claims and actions.

Kyrgyz authorities previously legally demanded a $220 million pollution fee from Kumtor Gold Company.

Centerra said that on June 3 a court in Bishkek granted an interim order against Kumtor Gold Company to secure the pollution fee claim.

A 2003 deal gave the Kyrgyz government a 17 percent stake ownership in the Kumtor project, with Centerra controlling the rest.

The agreement was renegotiated in 2009, giving the Kyrgyz government a nearly 33 percent stake. Later on, the Kyrgyz side has been insisting on a 50-50 split in ownership.

Sergey Kwan

TCA