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Kyrgyzstan PM to head gold mine talks

March 15, 2013 at 12:02 AM   |   Comments

BISHKEK, Kyrgyzstan, March 15 (UPI) -- Kyrgyzstan says a board headed by Prime Minister Jantoro Satybaldiev will seek to renegotiate an agreement with the owner of the country's biggest gold mine.

A government statement this week indicated Satybaldiev will act as chairman of the new advisory board, which has been formed after the Kyrgyzstan Parliament issued a decree last month to renegotiate the country's 2009 investment deal in the massive Kumtor gold mine.

Kumtor -- the biggest gold mine in the former Soviet Union -- is owned by the Canadian firm Centerra and has been the subject of protests and political battles in the impoverished Central Asian nation since the deal was forged by ousted former President Kurmanbek Bakiyev in 2009.

Critics, including Economy Minister Temir Sariev, have harshly criticized the terms of the agreement with Centerra, saying Kyrgyzstan citizens aren't getting their fair share of its profits, which were pegged by the government at $435 million from 18.7 tons of extracted gold in 2011, Radio Free Europe/Radio Liberty reported.

Kyrgyz protesters have been calling for the mine's nationalization. An October demonstration in Bishkek ended in violence -- three opposition members of Parliament remain jailed in connection with the clashes.

Sariev told Parliament in January the company paid only $310,000 in fines for environment damage caused at the site high in the isolated mountain range of Tien Shan in 2011.

The country received $146 million out of $941 million in total revenues from the mine in 2011, he said.

Under the February decree, the government has three months to renegotiate the Kumtor agreement, during which time the mine must continue to operate without interruption.

If no new deal can be forged, the decree authorizes the government to take steps to invalidate the 2009 legislation, Business New Europe reported.

The government said that in addition to Satybaldiev, the newly established advisory board would include First Deputy Prime Minister Djoomart Otorbaev, as well as the heads of relevant national ministries and departments.

Tuesday's resolution also pledged the government would "ensure the smooth operation of the Kumtor mine" and "explore options to improve the management of shares of the Kyrgyz Republic" in Centerra Gold Inc., of which the government now owns just less than 33 percent.

Meanwhile, Zhoomart Otorbayev, Kyrgyzstan's vice prime minister, said government is considering "various scenarios" of how to proceed on its relations with Centerra, the 24.kg news agency reported.

Asked during a lecture at the Academy of State Management if the government was prepared to fight a possible international lawsuit should the deal be nullified, or to lose Centerra altogether, Otorbayev said the government is weighing its possible actions carefully.

"We, of course, are considering various options," he said. "But we are accountable to the Parliament and should follow its decisions closely."

John Pearson, Centerra's vice president for investor relations, told RFE/RL the 2009 agreement is "transparent" and noted the company increased the government's share in the mine.

"So they are a shareholder, as well, and benefit from both the taxes and the employment, the wages, paid to employees," he said. "We employ over 2,700 people; 95 percent are Kyrgyz nationals and they are very well paid."

The company has called for "constructive dialogue" to resolve the issue.

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