The Canadian company operating Kyrgyzstan’s troubled Kumtor gold mine has announced that a shutdown will not happen. A last-minute agreement appears to end a period of brinksmanship between Kyrgyz officials and company representatives that could have pushed the country’s shaky economy over the edge.
Toronto-listed Centerra Gold threatened on June 2 to start implementing a shutdown plan at close of business on June 13, if it did not receive government approval for its annual work plan. Centerra executives said they had been seeking approval since late last year.
The company – Kyrgyzstan’s largest investor – said that “despite repeated submissions and discussions with senior officials,” the company remained in limbo, unable to receive the necessary permits to operate until Bishkek signed off on the work plan.
Environmental concerns were one reason for the hold-up: the State Agency for Environmental Protection had voiced misgivings that the company’s plans could damage the Davydov Glacier high up in the Tian Shan Mountains, where the mine is located.
Centerra Gold warned that “an extended shutdown […] would likely have a material adverse impact on the Kumtor mine and the Company’s operations, future cash flows, earnings, results of operations and financial condition.”
Averting a halt to the gold mining, which accounted for some 8 percent of GDP and over 50 percent of industrial output in Kyrgyzstan last year, was in Bishkek’s interests: a shutdown would have dealt a serious blow to Kyrgyzstan’s fragile economy – just after one lucrative economic lifeline vanished as the US military base at Manas closed its doors earlier this month.
Just in time for the deadline, Centerra Gold announced on June 12 that it had “received the necessary approval” and “therefore confirms that no shutdown will be required.”
Kumtor has only just emerged from a troubled period of wrangling over ownership restructuring. In February, parliament voted in favor of a controversial roadmap that would see the government trade its one-third interest in Centerra Gold for a 50-percent stake in a new owner-operator. The mine was also the scene of angry protests last year.