Move allows the government to take control of the country’s largest gold mine if Centerra Gold violates environmental standards.
The president of Kyrgyzstan signed a law that allows the government to take control of its largest gold mine if the Canadian operator of the facility is found to have violated environmental standards.
The move comes Friday as authorities step up pressure on Centerra Gold, the Canada-based miner who controls the Kumtor gold mine by claiming the company has committed environmental and tax violations worth more than $ 4 billion. of dollars.
Kumtor, a mine located in the east of the country over 4,000 meters (13,100 feet) above sea level, accounts for up to 10 percent of the depleted national economy.
Britain and Canada issued a joint statement on Friday warning of the “profound implications for foreign direct investment in Kyrgyzstan” following the passage of the law and the potential nationalization of the mine.
Centerra said last week that the law, which allows “external management” of the mine for a period of three months, violates the 2009 agreement that governs the mine and qualifies the lawsuits against the company as “completely without. foundation ”.
We do not know what would happen after the end of the three months of external management that the government can now choose to impose.
The terms of the company’s agreement with the government allow for international arbitration of any dispute that cannot be resolved in the country.
The head of a state commission to investigate violations at the mine on Wednesday announced a claim of more than $ 1 billion in tax violations against the company.
It came after a court fined the company’s Kyrgyz subsidiary more than $ 3 billion for dumping mining waste on glaciers.
Kyrgyzstan, a poor, mountainous country with few natural resources, has repeatedly accused Centerra, a TSX-listed company of which Kyrgyzstan owns more than a quarter, of blaming it on Kumtor.
President Sadyr Japarov’s sudden rise to power last October, after being released from prison during a political crisis, was particularly bad for Centerra.
As an opposition politician, Japarov led an unsuccessful attempt to nationalize the mine both in parliament and on the streets, where he oversaw several chaotic rallies against the company.
During one of these rallies in 2013, a provincial governor was kidnapped – a development that served as the basis for the arrest and sentencing of Japarov in 2017 to more than 11 years in prison for kidnapping. hostages.