Kyrgyzstan: Key Gold Mine at Risk of Stoppage

A member of the public supervisory board at Kyrgyzstan’s state mining agency has sent local media into a spin by claiming work at the giant Kumtor gold mine could grind to a halt January 1. 

Eldar Tadjibayev, also chair of one of the local mining industry’s biggest trade unions, bases his claim on the fact that the license to operate the mine has not been renewed because of a hold-up in parliament .

Even temporary stoppages at the mine, which accounts for about one-tenth of the struggling nation’s economy, could portend calamity.

“Kumtor’s fate is in the hands of the newly elected parliament,” Tadjibayev told journalists on December 16. 

The companies directly affected appear confident matters will be settled in good time. Kumtor Gold, which is the local affiliate of Toronto-listed Centerra Gold and operates the giant mine, has called the delay an “ordinary process.”

The hitch owes much to the disarray in the former parliament and negligence in the present one. The main problem, as a Centerra press release in June noted, is the local environmental agency’s “interpretation of the water code.” 

"The process of obtaining approval of Kumtor's annual mine plan and other permits required for the operation of the Kumtor project has been impacted by concerns from SAEPF [environmental agency] regarding the potential application of the Kyrgyz Water Code to the Kumtor operations. The Kyrgyz Republic government has proposed draft amendments to the Water Code to the Kyrgyz Republic parliament that, if adopted, would alleviate this concern. We understand that parliament will be considering the proposed amendments in the month of June," the statement read.

That was overly optimistic.

In the end, parliament failed to amend the water code before the October elections came around, while the new parliament has not yet got around to addressing the matter. Meanwhile, Kumtor’s temporary license is set to expire at the end of the month.

The environmental argument for not amending the water code is that it gives the mining company a free hand to mine glaciers at the high-altitude site. 

Though no thorough study has proven the company’s impact on glaciers, scientists affiliated to the UK’s Durham University used satellite remote sensing data to argue that waste-dumping at the mine had resulted in their “rapid advance” in a publication this summer.

For members of parliament and other government officials unaccustomed to reading scientific journals, it is the political logic that is most compelling. If they go ahead and enact the amendments, the fear is that nationalist opposition elements could use that decision as ammunition against them somewhere down the line. 

In the past, officials held responsible for concluding deals with the Canadians that were later viewed as unfavorable have been the subjects of, admittedly inconclusive, criminal cases.  

Some kind of a compromise seems inevitable.

While Bishkek remains at loggerheads with Centerra Gold (in which the government itself owns a 33 percent stake) over a new ownership deal for the mine, few dispute the need for it to keep churning out gold.

Kyrgyzstan: Key Gold Mine at Risk of Stoppage

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