http://business.financialpost.com/
TORONTO An ugly feud between Centerra Gold Inc. and the government of Kyrgyzstan is poised to get uglier as the Toronto-based miner has launched an international arbitration case against the state.
It is the first time since 2008 that Centerra felt the need to go to arbitration, and it reflects how toxic the company’s situation is Kyrgyzstan has become.
Last week, a local court fined the company US$98.4 million over its placement of waste rock from the Kumtor gold mine. There was also a separate US$10,000 judgment against the company, and other environmental claims continue to work their way through the court.
Centerra has stated repeatedly that it has done nothing wrong, and is appealing the rulings to a higher court. But after the big fine, spokesman John Pearson said the company decided arbitration is the best option going forward. “It’s the first time there has been a judgment like that in place,” he said in an interview.
When Centerra launched international arbitration in 2008, it encouraged the government to sit down at the bargaining table, and the two sides hammered out an investment agreement the following year. In a perfect world, that would happen again.
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