Kyrgyz MPs pass amendments permitting Centerra Gold glacier operations

Kyrgyz MPs pass amendments permitting Centerra Gold glacier operations
Kumtor boasts the second highest gold mining operation in the world, situated at more than 4,000m (14,000ft) above sea level.
By Kanat Shaku in Almaty November 20, 2017

Kyrgyzstan’s parliament on November 16 passed amendments to the country’s Water Code, permitting Canada-based Centerra Gold Inc. to conduct mining operations at the Davidov and Lysyi glaciers.

Centerra operates Kyrgyzstan’s flagship open-pit gold mine Kumtor through Kumtor Gold Company (KGC). Claimed ecological damage caused by the operation at Kumtor—the second highest gold mining operation in the world, located in the Tian Shan mountains more than 4,000m (14,000ft) above sea level—to glaciers has long been a point of contention between Kyrgyz officials and the company. Last year, authorities filed a lawsuit against KGC seeking environmental damages worth KGS7bn (€90.4mn), despite previous findings by the authorities which revealed that glacial destruction was not the result of Kumtor’s operations.

The dispute was settled, leading to the passing of the amendments, with Centerra having agreed to pay KGS12bn for environmental damage.

KGC’s operations at Davidov and Lysyi are expected to accelerate the melting of the two glaciers.

In September, Toronto-headquartered Centerra and Kyrgyzstan signed a Kumtor gold-mine-related settlement with regards to mutual environmental lawsuits. The agreement put an end to a dispute Kyrgyzstan has been locked into since 2016 over profit-sharing at the mine. Both sides advanced talks and reached a deal to affirm mine agreements from 2009, including tax and fiscal rules.

Centerra has agreed to provide a one-time $50mn payment to a new Kyrgyz state-run nature development fund as well as annual payments of $2.7mn conditional on the government continuing to comply with its obligations under the agreement. It is also to pay $7mn to a cancer care support fund and another $3mn within 12 months of Kumtor’s closure in the future.

The company is also to boost its payments to Kumtor’s reclamation fund to $6mn annually, until it covers an estimated reclamation cost of a minimum $69mn.

The Kumtor mine is the biggest employer and taxpayer in Kyrgyzstan, contributing 10% of the poor Central Asian country’s GDP. The government owns a 26.6% stake in Centerra.