Centerra vows to fight two enviro rulings as Kyrgyz woes continue

TORONTO (miningweekly.com) – Canada’s Centerra Gold is having a busy week at the Kyrgyz courts after the company received two rulings in two days against its wholly owned subsidiary Kumtor Operating Company (KOC) for alleged environmental infractions at its eponymous mine in the country. Centerra also had to defend itself against a further three claims to be heard on Friday and Monday.

The TSX-listed company on Wednesday confirmed that the Bishkek Inter-District Court had ruled against KOC on an environmental claim brought by the State Inspectorate Office for Environmental and Technical Safety of the Kyrgyz Republic (SIETS) and awarded damages of 6.7-billion Kyrgyz soms, or $98.4-million. The SIETS alleged that the placement of waste rock on Kumtor’s waste dumps was subject to tariffs that were normally applicable to industrial or domestic waste.

The ruling came on the heels of a ruling issued on Tuesday by the same court against KOC in a claim brought by SIETS regarding unrecorded waste from Kumtor’s effluent and sewage treatment plants, which awarded 663 839 Kyrgyz soms, or $10 000.

Centerra advised that it and KOC strongly disputed the SIETS claims and intended to appeal both decisions to the Bishkek City Court and, if necessary, to the Kyrgyz Republic Supreme Court.

The parent company did not rule out the option to refer the disputes to international arbitration, as provided for under the 2009 restated investment agreement, which provided a complete code of all taxes, fees and other charges applicable to the Kumtor project.

There remained two outstanding environmental claims made by the SIETS before the Inter-District Court, including alleged land damage, for which a hearing was scheduled on Friday, and failure to pay for water use, for which a hearing was scheduled on Monday. The two remaining SIETS claims totalled about $5-million, Centerra advised.

Meanwhile, there was another claim made before the Inter-District Court made by the Kyrgyz State Agency for Environment and Forestry Protection (SAEPF) alleging that KOC owed additional environmental pollution fees and which claimed damages of about $220-million. The next court hearing in the SAEPF claim was scheduled for May 30.

Centerra stated that its position was bolstered by systemic audits and investigations over the years by Kyrgyz and international experts, including by an independent, internationally recognised expert who carried out a due diligence review of Kumtor’s performance on safety, health and environmental matters at the request of Centerra’s safety, health and environmental committee of the board.

The company vowed to continue to challenge the SIETS and SAEPF claims in the Kyrgyz courts by starting international arbitration proceedings.

Centerra's Kumtor openpit mine had faced several setbacks since the project started in 1994, including threats of nationalisation.

According to Centerra, it had previously benefited from a “close and constructive” dialogue with the Kyrgyz government and remained committed to resolve all matters outstanding affecting the Kumtor mine.

These included the claims made by the SIETS and SAEPF; the claim made by the Kyrgyz Republic General Prosecutor’s Office (GPO) regarding a US$200-million intercorporate dividend paid by Kumtor Gold Company (KGC) to Centerra, and the related search of KGC’s Bishkek office on April 28; claims made by the GPO seeking to invalidate Kumtor’s land-use certificate and to seize certain lands within the Kumtor concession area; and outstanding permits and approvals of Kumtor’s 2016 annual mine plan, without which Kumtor would have to shut down on July 1.