Centerra Gold's Kyrgyz unit refuses to pay €88mn environmental fine

By bne IntelliNews May 27, 2016

Kumtor Gold Company, a unit of Canada’s Centerra Gold operating Kyrgyzstan’s largest gold mine, is refusing to pay a KGS6.7mn (€87.6mn) fine for environmental damages, Kloop.kg news website reported on May 26, citing Kyrgyz ecology authorities.

A court in Bishkek ruled in favour of the penalty on May 25 as part of a handful of lawsuits filed against Kumtor Gold by the Kyrgyz ecology authorities. The lawsuits, coming on the back of an undergoing  investigation into Kumtor Gold for financial violations, threaten to further deteriorate the already rocky relationship the Kyrgyz government has with Centerra Gold.

Toronto-based Center Gold, said in a statement that the fine was related to accusations that the miner placed waste rock on dumps “subject to tariffs that are normally applicable to industrial or domestic waste.” Local authorities claim the waste rock was placed too close to waterways, which risked contaminating rivers and would eventually require the building of water purification facilities downstream.

In another court ruling on May 24, Kumtor Gold was fined $10,000 after it was found it guilty of failing to record waste being expelled from the concession’s sewage treatment facility. Centerra Gold is refuting the claims and said it will appeal both decisions to the Bishkek City Court and, if necessary, to the Kyrgyz Republic Supreme Court. Centerra Gold is also reserving its right to refer the disputes to international arbitration.

Kumtor Gold is currently 100% owned by Centerra Gold through its fully-controlled unit, Kumtor Gold Company. Kyrgyzstan, via state mining firm Kyrgyzaltyn, holds a 32.7% stake in Centerra Gold.

Kumtor Gold is the country’s single largest contributor to GDP – it accounted for 7.4% of GDP and a fourth of the country’s total industrial production in 2014. The mine is also the nation’s largest taxpayer and employer.

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