Mining’s old guard needs strong medicine
A new report details subpar investor returns in the mining industry over the last decade, particularly big cap diversified companies which have not adapted to new realities.
Canada’s Centerra Gold (TSX:CG) agreed this week to extend the deadline for completion of all conditions included in a deal it signed in September with the Kyrgyz government, ending long-dragged environmental disputes over the firm’s Kumtor gold mine, the country’s largest.
While the Toronto-based miner did not provide much detail about the reasons for the deferral, it said the date had been moved from June 22 to July 23.
The announcement comes about a week after MINING.com reported the country’s new Prime Minister, Muhammadkaliy Abylgaziev, was reviewing the agreement signed by his predecessor, adding his administration planned to submit to parliament its own proposals regarding the document. The authority, however, didn’t elaborate on when or how radical those suggested changes might be.
Deadline for fulfillment of conditions included in agreement that would end all disputes over the firm’s Kumtor gold mine, has been pushed back about a month.
The news also follows recent charges of corruption against former Prime Minister Sapar Isakov, who signed the strategic agreement with Centerra last year — a development local media said it could jeopardize the legitimacy of the pact.
When and if finally signed, the wide-ranging arrangement would end a long-drawn-out dispute that crippled investor confidence in the impoverished Central Asian country and prevented Centerra from partaking in any profit from its majority-held and majority-operated Kumtor mine, resulting in the Canadian company filing for international arbitration.
The settlement would also end mutual lawsuits and force the Kyrgyz government to drop all environmental claims against Centerra and its subsidiary. In return, the miner would increase its annual environmental contributions.
Kumtor, which lies near the Chinese border at an altitude of 4,000 metres, has produced around 11m ounces since inception and remaining reserves are pegged at 5.6m ounces.
The Kyrgyz government owns just under a third of Kumtor and the mine contributes nearly 10% of the country’s GDP.
