Move allows the government to take control of the country’s largest gold mine if Centerra Gold violates environmental standards.
The President of Kyrgyzstan has signed a law allowing the government to take control of its largest gold mine if it is found that the Canadian operator of the facility has violated environmental regulations.
Friday’s move comes as authorities step up pressure on Centerra Gold, the Canada-based miner that controls the Kumtor gold mine, claiming the company has committed environmental and tax violations worth more than $ 4 billion.
Kumtor, a mine located in the east of the country at an altitude of more than 4,000 meters, accounts for up to 10 percent of the national economy.
On Friday, Britain and Canada issued a joint statement warning of the “far-reaching implications for foreign direct investment in Kyrgyzstan” on the passage of the law and the potential nationalization of the mine.
Centerra said last week that the law, which allows for “external management” of the mine for a period of three months, violates the 2009 agreement governing the mine and describes legal claims against the company as “totally useless.” “.
It is unclear 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 investigating the violations at the mine announced on Wednesday a claim of more than $ 1 billion in tax offenses against the company.
This came after a court fined the Kyrgyz subsidiary of the company more than $ 3 billion for dumping mining waste on glaciers.
Kyrgyzstan, a poor, mountainous country with few natural resources, has regularly accused Centerra, a Toronto-listed company of which Kyrgyzstan owns more than a quarter, of changing it above Kumtor.
The sudden rise to power of President Sadyr Japarov last October after he was released from prison during a political crisis was bad news for Centerra.
As an opposition politician, Japarov led an unsuccessful proposal 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 formed the basis of Japarov’s arrest and sentencing in 2017 to more than eleven years in prison on hostage-taking charges.
