Kyrgyzstan pushing to resolve Kumtor ownership fight

By bne IntelliNews August 13, 2013

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The Kyrgyz government plans to open a round of talks with Centerra Gold, the majority shareholder in the Kumtor gold mine, by August 16, Prime Minister Zhantoro Satybaldiyev has announced. Bishkek is pushing to put a revised agreement before parliament in September.

A round of talks will start by the end of the week, Satybaldiyev told a government session on August 12, according to local press reports. Bishkek announced earlier this year that it will seek to renegotiate the existing agreement on Kumtor, Kyrgyzstan's largest gold mine. This follows a 2012 report, commissioned by the government, which said that the current agreement, negotiated under former President Kurmanbek Bakiyev in 2009, is not in the country's interests.

A proposal announced June suggested the government may seek to give up the minority stake it holds in Toronto-listed Centerra. In exchange, it would receive a stake of equal value in a new company that will own and operate Kumtor. This would give Bishkek a majority stake in the mine.

Two existing companies - Kumtor Operating Company and the Kumtor Gold Company - are expected to be merged to form a single Kyrgyz registered company, Satybaldiyev said on August 12. "The board of directors of the joint venture will be formed fifty-fifty, the first year it will be chaired by Kyrgyzstan. The share of the two sides in the company will be decided during the negotiation process," said Satybaldiev, according to Kabar.

Bishkek wants talks to be wrapped up by early September so that the revised agreement can be submitted to the parliament by September 10. Officials are also waiting for a report from independent environmental experts, due to be completed by the end of August. Alleged environmental damage to the area surrouding Kumtor is one of the main grievances voiced by local residents.

Kumtor is a hot political issue in Kyrgyzstan, with many calling for it to be nationalised. In May 2013, violent riots broke out around the mine, resulting in a temporary suspension of production.

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