ENVIRONMENTALISTS RENEW CALL FOR KYRGYZ GOLD MINE REVIEW FOLLOWING FATAL WALL COLLAPSE
Jim Lobe: 7/15/02

Environmentalists in Kyrgyzstan are pressing for an independent review of the mining practices of a Canadian subsidiary following an accident that left one worker presumed dead. Representatives of the Kumtor Operating Company are resisting calls for an open investigation, and are disputing claims that the accident-plagued gold mine is inefficiently operated and poses an ecological threat.

The most recent incident at the Kumtor mine involved the July 8 collapse of a wall, burying a worker identified by the company as 25-year-old Almaz Jakishev. This incident follows a series of toxic spills at the open-pit mine, believed to be the world’s eighth largest gold field.

Kumtor, a wholly owned subsidiary of Canada’s Cameco Corp., launched its commercial operations in 1997. Since then, Kumtor has been the scene of numerous accidents, perhaps the most serious occurring in May 1998, when cyanide spilled into the Barskoon River and caused the hospitalization of dozens of area residents. The string of mishaps are a source of concern for watchdog groups in Kyrgyzstan, who say Kumtor should be more open about its prevention and accident response policies.

"Cameco must allow an independent investigation of the mine’s safety and environmental practices," said Kalia Moldogazieva of the Human Development Center of Kyrgyzstan. "Any responsible operator would welcome such an audit; they should have nothing to hide."

The mine project, in which Cameco and Kyrgyz government have 30 percent and 70 percent stakes, respectively, is backed by loans and guarantees from a number of public financial institutions, including $40 million each from the World Bank’s International Finance Corporation (IFC) and the European Bank for Reconstruction and Development (EBRD), as well as additional support from US and Canadian export promotion agencies. The mine is reportedly responsible for generating about 9 percent of Kyrgyzstan’s GDP, according to the Washington-based Center for International Environmental Law (CIEL).

As with information about its mining practices, Kumtor earnings data is tightly guarded. "The company hides all information on … sales and profits," said a commentary in the Kyrgyz newspaper Moya Stolitsa on July 3. "Even members of parliament tried to figure out the mine’s profitability, but they could not."

International environment groups are joining Kyrgyz activists in calling for more openness at Kumtor. The Mineral Policy Center (MPC), MiningWatch of Canada, and Budapest-based CEE Bankwatch are reviving calls for Kumtor to permit an independent assessment of mine operations.

"This is the third strike," said MPC President Stephen D’Esposito. "We had a cyanide spill, then another chemical spill [in 1998], and now we have this tragic event where an employee has been killed due to safety problems.

"These incidents keep occurring and the citizens who live near the mine have asked for, and have never been granted, the right to do a simple check-up," D’Esposito continued. "There are some issues that need to be looked at and addressed so we can prevent these things in the future and investigate issues that may become problems in the future."

Jamie McIntyre, a spokesman at Saskatchewan-based Cameco, suggested that it was unlikely that the company would accept an outside audit. "We’re really focused on the government of Kyrgyzstan and the investigation by its state inspector. They have the authority to investigate this incident, as they have in the past."

"Nobody is more motivated to understand what happened than we and the government of Kyrgyzstan are," insisted McIntyre who described Monday’s accident as a "significant pit wall failure." Cameco said it could take several months to clear the rubble caused by the wall collapse, and that mining operations will operate at only about 60 percent of capacity until then. In 2001, the mine reportedly produced more than 750,000 ounces of gold and employed more than 1,500 people.

The accident is certain to fuel the debate over the mine’s viability. Some critics say Kumtor’s risks do not justify the returns. Located at an elevation of almost 4,000 meters in the remote Tien Shan Mountains, the $360 million mine, one of Kyrgyzstan’s biggest foreign investments, sits on permafrost in an earthquake zone.

"I’ve always thought this was a harebrained mine," said Joan Kuyek of MiningWatch. "They get a half thimbleful of gold for a ton of rock."

Environmentalists are also disturbed about Kumtor’s reluctance to divulge information about the Barskoon cyanide spill and other mishaps. The company held off reporting the Barskoon incident for several hours, according to local non-governmental groups. By that time, the cyanide had flowed far downstream.

According to various reports, the death toll from the cyanide spill ranges from zero to four. Up to 2,600 people sought treatment for rashes, sores and other ailments, and more than 1,000 were hospitalized. Subsequent impact studies have shown that the mortality and morbidity rates in the Barskoon area have risen dramatically compared with previous years.

In addition to the health consequences and economic losses resulting from contaminated produce and the decline in tourism at Lake Issyk Kul, the spill fueled distrust and resentment among the local population against Kumtor’s operators, according to CIEL.

Local civic and international environmental groups have long pressed the company to open access to the mine and publicly release key documents, including its emergency response plans, environmental and safety monitoring data, studies on the impact of mine tailings on local streams and rivers, and its plans for cleaning up the site when production was expected to end around 2008.

Concern deepened after two more spills – one of 70 liters of nitric acid in July 1998 and another of 1.65 tons of ammonium nitrate dumped by a mine truck in January 2000, an incident which the company did not report to authorities until the following day. Although neither caused significant damage, they intensified calls for an independent assessment of project’s safety.

It is in that context that the July 8 accident has again raised concerns. The mine wall collapse, according to Kuyek, "means there could be something very wrong with [the company’s] geological studies around the mine. And if that’s the case, what else is wrong? If the tailings dam [where the cyanide-processed waste is stored] had collapsed, this could have been catastrophic."

Kuyek noted that Cameco, which is also the world’s biggest uranium producer, generally has a "relatively solid" reputation in environmental protection in Canada. The company has a huge uranium mine in northern Saskatchewan, where relations with local residents are reported to be harmonious.

Some international activists are trying to exert pressure on global financial institutions, including the IFC, to get Kumtor to accept an independent audit. "The lesson here is that public financial institutions should use the leverage that they have to ensure safety and sound environmental practices," said Jozsef Feiler of CEE Bankwatch. "Until they do, toxic spills and tragic accidents will continue in the mining sector."

Editor’s Note: Jim Lobe is a freelance reporter specializing in financial affairs. He is based in Washington.

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Posted July 15, 2002 © Eurasianet
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