Vedanta to exclude base metals business from sweeping demerger
The group said it will consider the base metals business demerger at a later stage.
On Friday Canadian Centerra Gold (TSX:CG) hosted a visit by the Kyrgyz Prime Minister Babanov to the Kumtor mine. The visit, which included a tour of the mine and mill facilities, came a week after Kyrgyzstan authorities said they wanted to renegotiate a contract with the gold miner.
The Kyrgyzstan government issued a decree yesterday that cancelled a prior ruling that gave Kumtor certain surface rights to the project. The ruling was based on a report that said Centerra had damaged the environment and stole the country’s riches.
In a statement, the Toronto-based company said the Prime Minister confirmed Thursday’s decision to cancel the prior law, which “would have no impact on or limit in any way Kumtor’s activities or operations.”
Centerra is a significant employer and taxpayer in the Central Asian 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.
Last week, Kyrgyzstan’s parliament approved a review to the operating license for Centerra. The decision ratified by 67 votes to 11, implies an increase in the government’s current 33% stake of the gold miner.
The Canadian miner was granted the license for Kumtor under Kyrgyzstan deposed leader, Kurmanbek Bakiyev, who was accused of corruption.
Since it started running in 1997, Kumtor has generated $1.9 billion for Kyrgyzstan and produced more than 8.4 million oz. of gold.
Comments
JGault
One of the fundamental problems world wide is that most govt’s are broke or near broke. They have few controls on how they spend money and as such they have to find creative ways to supplement shortfalls. Added to this is or likely a cause in most countries is the lack of experience of govt officials – who as a result make short sighted decisions such as this one. (as is also happening in Mexico currently)
This govt take- back / “renegotiation” or plainly – Govt Seizure — in the long run will cause more harm than good for Kyrgyzstan as it will instantly change the world opinion on the risks of investing in this country.
Stupid move on the part of the Govt.