Kyrgyz lawmakers back seizure of Canadian-run gold mine

·2-min read
Kyrgyzstan regularly accuses Canadian-run Centerra Gold of shortchanging it over the giant Kumtor gold mine

Kyrgyzstan's parliament voted Monday in favour of a plan to seize the country's largest gold mine after the Canada-based operator said it was taking the government to an international court.

The poor, mountainous country in ex-Soviet Central Asia has few natural resources, and regularly accuses Centerra Gold of shortchanging it over the giant Kumtor gold mine.

Centerra Gold is a Toronto Stock Exchange-listed company of which Kyrgyzstan owns more than a quarter. The high-altitude mine accounted for 12.5 percent of Kyrgyzstan's economy last year.

But struggles over the facility entered unchartered territory this month when President Sadyr Japarov signed a law allowing the government to temporarily take over operations to remedy what he said were environmental and safety violations.

The head of a state commission investigating wrongdoing at the mine suggested the temporary "external management" period could last around three months.

Lawmakers on Monday balloted unanimously for the plans in a non-binding vote, which should now be considered by the government.

Canada’s Foreign Minister Marc Garneau and International Trade Minister Mary Ng issued a statement Monday expressing their disappointment at the decision.

"This will potentially have far-reaching consequences on foreign direct investment in the Kyrgyz Republic," they said.

- Intimidation accusations -

The law came the same month that a court fined Centerra's Kyrgyz subsidiary Kumtor Gold Company (KGC) over $3 billion for dumping mining waste on glaciers at the mine 4,000 metres above sea level and a state commission alleged that KGC owed over $1 billion in unpaid taxes.

Centerra has called Kyrgyzstan's actions "wrongful and illegal" and on Sunday said it had "initiated binding arbitration to enforce (Centerra's) rights under longstanding 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 raid of KGC's office in Bishkek on May 15".

Japarov's sudden rise to power last October after getting freed from jail during a political crisis was particularly bad news for Centerra.

As an opposition politician Japarov led an unsuccessful bid to nationalise the mine both inside 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 formed the basis for the 2017 arrest and sentencing of Japarov to over 11 years in jail on hostage-taking charges.

Canada, Britain and the European Bank of Reconstruction and Development have all criticised Kyrgyzstan's moves against Centerra.

EBRD, which has in the past provided finance to the Kumtor project, said Sunday that the potential takeover "risks the country's economic recovery and its reputation as a secure place for investors to operate".

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