The Kyrgyz parliament rejected Wednesday a government-proposed deal with Canada’s Centerra Gold (TSX:CG) on operating the country’s largest gold mine, Kumtor.
The deal called for setting up a joint venture in which both Centerra and the Kyrgyz government would own 50% of shares. Under a 2009 deal, the Kyrgyz government stake was set at around 33%.
Kyrgyz lawmakers said the government must agree on a new deal with Centerra by December 23 to raise the country’s ownership to 67%.
In an update on the situation, Centerra said “there can be no assurance that any transaction will be consummated or that the company will be able to successfully resolve any of the matters currently affecting the Kumtor project.”
The gold company has been under pressure to rework a 2009 contract to operate the Kumtor for over a year, during which has faced massive protests from locals demanding the mine’s nationalization and more social benefits.
Despite endless political turmoil, Centerra has successfully operated the Kumtor mine since 1997. The Canadian miner is a significant employer and taxpayer in the country and a key contributor to the Kyrgyz economy.
In fact, the Kumtor open pit gold mine accounts for 60% of the nation’s industrial output and, according to the company, it is the largest gold mine operated in Central Asia by a Western-based company.
The Kumtor mine output is expected to almost double this year to as much as 600,000 ounces, according to Centerra.
5 Comments
Rebel With A Cause
I guess the super-greedy Kyrgyz parliament doesn’t care that upwards of 10,000 Kyrgyz workers will lose their jobs if Centerra walks away from this mine. They also fail to realize the huge economic impact that will result on their already fragile economy. I believe this mine represents 12% of their GDP. How stupid can they be?
VP
greedy and ignorant gangs rule, never give in,I have lots of shares let them close the mine , take the equipment out and I will take my capital, to hell with those stupid thieves in Kyrgystan, let them suffer for their corruption and thievery
Madskul
Kleptocracy in action.
Thames Hartley
There are times when a company has to recognise that the project is a lost cause. The company needs to close the mine and remove its equipment. Certainly no other company would be dumb enough to replace it and the government is incapable of operating thwe mine as it already proved.
marpy
When doing business in an X commie corrupt banana republic, that is the way it goes. They do not understand investment and western methods and are stuck in their inward looking nationalistic views. I suspect that foriegn investment has more or less ground to a halt as investors await the outcome of this mess.