Feb 21, 2013 (Reuters) – Kyrgyzstan has given Centerra Gold three months to redraw terms before ripping up an agreement to run its flagship mine in the Central Asian country, accusing the Canadian miner of “colossal” environmental damage and underpaying the state.
Centerra said it had received a new claim from the government for $315 million for alleged environmental destruction, almost tripling the damages claims that it faces.
Parliament ended two days of fierce debate by passing a resolution on Thursday demanding the government revise a deal struck in 2009, a year before then-president Kurmanbek Bakiyev was driven from power by a popular revolt.
“If within three months our negotiations yield no results, the government will unilaterally cancel the agreement,” Economy Minister Temir Sariyev said during the debate on Wednesday.
Centerra, whose shares have halved since the Kyrgyz government said in June it would review the mine deal, said the 2009 agreement was “solid and transparent” and it had already started talking to the government.
The Kumtor mine, bisected by a glacier 4,000 meters (13,000 ft) above sea level, is the largest gold mine in Central Asia operated by a Western company. It is the industrial centerpiece of the fragile Kyrgyz economy, contributing 12 percent of GDP in 2011.
Kyrgyzstan’s gross domestic product contracted by 0.9 percent last year after Centerra reduced output at the mine by 40 percent as a result of ice movement in the pit.
Sporadic protests, often fueled by the nationalist rhetoric of opposition politicians in the five-party parliament, have also disrupted operations at the mine over the last year.
Sariyev said there was no desire within parliament to nationalize the mine, repeating earlier statements by both the country’s president and prime minister.
But a specially appointed state commission has determined that deals signed by Centerra between 1992 and 2009 were approved by previous political elites without public discussion and were not entirely in Kyrgyzstan’s interests.
“We want to cancel it all and return to the legal framework,” said Sariyev, who also heads the commission.
He accused Centerra of paying too little into Kyrgyz state coffers and said the company had inflicted “colossal damage” to the environment.
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