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Canadian Firm Files Further Claims Against Kyrgyzstan Over Kumtor Gold Mine

Heavy dump trucks transport waste rock to heaps at the Kumtor gold mine. (file photo)
Heavy dump trucks transport waste rock to heaps at the Kumtor gold mine. (file photo)

Canada's Centerra Gold says it has filed additional arbitration claims against the Kyrgyz government as it battles for control of the Central Asian country’s Kumtor gold-mine project.

“The company’s amended Notice of Arbitration seeks to hold the Kyrgyz government and Kyrgyzaltyn JSC responsible for any and all losses and damages that result from their coordinated campaign to seize the gold mine in violation of long-standing investment agreements and without compensation to Centerra,” Centerra said in a statement dated July 7.

The giant Kumtor gold project has been the focus of international attention in recent months after the government moved to temporarily take over operations at the mine -- which is run by Centerra Gold -- for what President Sadyr Japarov said was a necessary move to remedy environmental and safety violations.

In May, the government approved a law allowing it to 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.

Centerra has called Kyrgyzstan's actions "wrongful and illegal" and in May 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.

“Rather than honor its commitment to arbitrate any disputes in a transparent manner in a neutral forum, the government and those acting in concert with it have proceeded to expropriate the Kumtor mine, placing Centerra’s investment and the livelihoods of thousands of Kyrgyz workers at risk," Centerra President and Chief Executive Officer Scott Perry said in the statement.

"Centerra would much prefer to resolve this dispute in a constructive dialogue with the Kyrgyz authorities, but their repeated refusal to engage leaves us no choice but to seek effective remedies through arbitration and other legal means,”
he added.

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 have all criticized Kyrgyzstan's moves against Centerra.