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Kyrgyz Parliament Supports Seizure Of Canadian-Run Gold Mine


The Kyrgyz state owns 26 percent of the Kumtor Gold Mine's shares. 

BISHKEK -- Kyrgyzstan's parliament has backed a plan to temporarily seize the country's largest gold mine after its Canadian operator, Centerra Gold, announced it was taking the government to an international court.

Bishkek has regularly accused the Canadian mining company of cheating on the money it owes the government for gold production at the giant Kumtor mine.

But the dispute escalated on May 14 when President Sadyr Japarov signed a law allowing the government to temporarily take over the mine's operations. Japarov says the move is necessary to remedy environmental and safety violations.

According to the new law, the government can take control for up to three months of any company that operates under a concession agreement in Kyrgyzstan if that firm violates environmental regulations, endangers the local environment or lives of people, or causes other significant damage.

Centerra's Kyrgyz subsidiary Kumtor Gold Company (KGC), Kyrgyzstan's biggest taxpayer, is the only firm in the former Soviet republic that operates under a concession agreement.

The head of a Kyrgyz state commission investigating alleged wrongdoing at the Kumtor mine said on May 17 that his group concluded that the agreement on giving the mining concession to Centerra Gold must be revoked, due to what he called "corruption" and "violations of safety and environmental regulations."

Japarov suggested a temporary "external management" period of the mining operations could last three months -- a proposal that parliament unanimously supported in a nonbinding vote later in the day.

In a joint statement, Canadian Foreign Minister Marc Garneau and International Trade Minister Mary Ng said they were "very concerned" by Kyrgyzstan's move, and warned it could have far-reaching consequences on trade and foreign investment in the Central Asian country.

"Measures such as this that have the potential to reduce trade and foreign direct investment will further undermine the economic livelihoods of the Kyrgyz people."

Kyrgyzstan's move comes after a court fined KGC more than $3 billion for dumping mining waste on glaciers near the mine 4,000 meters above sea level. A state commission also recently alleged that KGC owes more than $1 billion in unpaid taxes.

Centerra has called Kyrgyzstan's actions "wrongful and illegal." On May 16, the Canadian firm said it had "initiated binding arbitration to enforce its rights under long-standing investment agreements with the government."

It also accused Kyrgyz law enforcement of intimidation -- including police visits to the homes of several senior KGC managers and a May 15 raid of KGC's office in Bishkek.

Japarov's sudden rise to power in October 2020 after being freed from jail in the midst of a political crisis was particularly bad news for Centerra.

As an opposition politician during the past decade, Japarov had led an unsuccessful bid in parliament and on the streets to nationalize the mine.

He oversaw several chaotic rallies against the company -- including a 2013 rally in which a provincial governor was kidnapped, the basis of Japarov's 2017 arrest and 11-year prison sentence on hostage-taking charges.

Canada, Britain, and the European Bank for Reconstruction and Development (EBRD) have all criticized Kyrgyzstan's moves against Centerra.

The EBRD, which has provided financing to the Kumtor project, said on May 16 that the potential takeover of the mine "would put in doubt the commitment of the Kyrgyz Republic to stand by its obligations to its international partners and foreign investors."

The London-based bank said the takeover of the Kumtor mine by Bishkek "risks the country's economic recovery and its reputation as a secure place for investors to operate."

With reporting by AFP