Commodities Update: Copper reaches all-time high, Centerra Gold falls
In a news release Monday, Centerra said Kyrgyzstan “effectively seized control” of the mine over the weekend, a move the company said violates a decades-old operating agreement with the former Soviet republic.
“Today’s action by the Parliament of the Kyrgyz Republic is a clear violation of Centerra’s and [Kumtor Gold Company’s] rights in the Kumtor Mine as well as the government’s obligations to Centerra and KGC under longstanding investment agreements. This and other recent actions have no justification whatsoever under those agreements or applicable law,” the company said in the release.
Kyrgyzstan passed a law earlier this month that would allow the country to install “external management” on companies that operate in the republic under concession agreements if the state deems the project poses a threat to human health or life.
Centerra’s local subsidiary, the Kumtor Gold Company (KGC), is the only project that would fall under the scope of that law.
The move has caught the attention of the federal government. In a statement Monday, Foreign Affairs Minister Marc Garneau warned that the seizure of the mine could have far-reaching consequences for foreign direct investment into Kyrgyzstan.
“We are disappointed with the decision taken at the extraordinary session of the Parliament of the Kyrgyz Republic on May 17 to move forward with the imposition of external management on the Kumtor Gold Company, and statements made during the parliamentary session that Kyrgyz control will be sought over a publically traded Canadian-based company with multiple international assets,” Garneau said.
The Kumtor mine is the single most important economic project in the country, accounting for 12.5 per cent of GDP in 2020, and nearly a quarter of overall industrial output.