The Kyrgyz authorities nationalized the Kumtor gold deposit, owned by the Canadian company Centerra Gold

The government of Kyrgyzstan announced the completion of the process of nationalization of the Kumtor gold deposit, which is the largest enterprise and one of the pillars of the country’s economy. The share of Kumtor in the country’s GDP was estimated at 7-9%, and the share of gold in the volume of Kyrgyz exports reached 40% in 2015. The Canadian company Cameco has been developing Kumtor since the 1990s, and then its subsidiary Centerra Gold Inc.

On November 19, after the completion of exchange trading, the management of Centerra Gold agreed that the company “no longer owns the national treasure of the Kyrgyz people – the Kumtor mine”, it says in a press release from the government of Kyrgyzstan. In this regard, the company “was forced to write off $ 926 million from its book value.”

“This decision was made by Centerra Gold Inc. at the request of the Securities Commission, the province of Ontario (Canada) “, – stressed the chairman of the Cabinet of Ministers of Kyrgyzstan Akylbek Zhaparov.

According to him, the government of Kyrgyzstan “from the very first day called on the management of Centerra Gold Inc. to recognize the infliction of enormous damage to the nature and economy of our country. “

“We believe that the international community will soon be convinced that it is not about infringing on the interests of investors. The Cabinet of Ministers will continue to actively defend the rule of law and the national interests of the people of the Kyrgyz Republic, ”the Prime Minister assured.

V message the Canadian company called the nationalization of the mine “takeover”. “We fear that unjustified government action will jeopardize thousands of well-paid jobs and businesses for hundreds of Kyrgyz suppliers.” it says in an appeal to the people of Kyrgyzstan, published by the Centerra Gold press service.

The company recalled that since 1994, it has invested more than $ 3.4 billion in the development and operation of the mine in accordance with international environmental and safety standards. “Under our leadership, the Kumtor mine has become the largest private employer in the Kyrgyz Republic, the largest taxpayer, making a significant contribution to the Kyrgyz economy and important social programs,” the company stressed.

On May 17, the deputies of the Kyrgyz parliament decided to introduce external government at the Kumtor gold mine. 11 days earlier, parliamentarians adopted a bill allowing the state to interfere in the activities of a joint-stock company if it threatens the life, health of citizens and the environment.

The Kyrgyz authorities also considered that the gold mining company Kumtor Gold Company (subsidiary of Centerra Gold) should pay about $ 4.2 billion to the treasury in taxes and compensation for environmental damage.

The international scandal around the Kumtor field began shortly after the change of power in Kyrgyzstan. In October 2020, opposition leader Sadyr Japarov became the country’s president, who had been previously released from prison by protesters.

Back in 2012, Sadyr Japarov, being a member of parliament, advocated the cancellation of the “unfair” agreement between the Kyrgyz authorities and the Canadian gold mining company Centerra and the nationalization of Kumtor.

An agreement concluded in the 1990s between the Kyrgyz authorities and the Canadian company Cameco, which later created a subsidiary of Centerra Gold, provided that Kyrgyzstan owned two-thirds of the shares of Kumtor Gold Company. Moreover, Cameco and its structures were not subject to taxes and any fees until 2003 (with the exception of payments for land lease).

When the tax-exempt grace period ended, the Canadian partner proposed a deal. The bottom line was to create Centerra Gold and transfer the Kumtor Gold Company to it. After the restructuring, the republic, represented by the state company Kyrgyzaltyn, received a 33% stake in Centerra, and Cameco – 67%.

In 2009, a new agreement was signed, according to which the concession area of ​​the field expanded from 10 thousand to 26.3 thousand hectares (glaciers fell into the development zone), and project companies were allowed not to pay taxes until 2042.

“It is difficult to blame anyone, but it looks like there were elements of corruption. The exchange of gold for shares was not profitable. It was necessary to take the profit directly, and we would not have dragged out such a miserable existence today, ”said Gani Asanaliev, a geologist, deputy of the first convocation of the Kyrgyz parliament, regarding the agreements on Kumtor. His words led RIA Novosti.

As part of an investigation into the facts of corruption related to the conclusion of agreements on the development of Kumtor, former and current MPs, brother of ex-President Sooronbai Jeenbekov and former Prime Minister Omurbek Babanov were arrested.