The Kyrgyzstan Parliament has passed a law that will enable the government to impose “external management” on the Kumtor Gold Company (KGC), owner Centerra Gold said on Friday, while also revealing that the mine faced a $3-billion civil claim and that it owed $170-million in additional taxes.
Centerra explained in a statement that the external management would apply to companies operating under concession agreements, of which KGC was currently the only one.
The newly adopted law would apply if KGC violated safety legislation, the Canadian miner said. In such an event, the company would be prohibited from managing Kumtor and the Prime Minister would be able to appoint an external manager to take control of all management activities of KGC, including its bank accounts.
It is understood that the law was proposed, passed three readings and was adopted by Parliament in a single day. It would now be referred to the President for signature. Akylbek Japarov, who is chairperson of the Kyrgyz Republic State Commission formed in February to review the activities of the Kumtor mine, sponsored the law.
Centerra also said that it was aware of other draft laws and decrees, which sought to undermine the 2009 restated Kumtor project agreements and the tax and fiscal regime under which the mine had been operating since 2009. It was unclear, at this stage, whether such drafts had progressed past the proposal stage, the Canadian miner noted.
Further, Centerra said that KCG was facing a civil claim brought by four private citizens, who in March requested that KCG’s past practice of placing waste rock on glaciers be determined to be illegal.
This week the claimants have amended their claim to demand more than $3-billion in environmental damages in favour of the Kyrgyzstan government.
One the claimants is said to be the son of Dinara Kutmanova, the director of the Kyrgyz Republic State Agency for Environment Protection and Forestry.
Regarding taxes, the State Tax Service had released the results of the reaudits that were done for 2015 to 2020, and had found that KGC now owed more than $170-million in additional taxes.
Centerra said that it believed the claims advanced by the State Tax Service and individual Kyrgyzstan claimants were “entirely meritless” and that the new and draft laws, if implemented, would violate the restated project agreements entered into in 2009.
The 2009 project agreements were approved by the Parliament and Constitutional Court.
The mining firm noted that it would continue to seek to work with authorities to resolve any outstanding issues in accordance with the 2009 restated project agreements, which provided for disputes to be resolved by international arbitration.
“No assurances can be given that any of the current or future legal claims of the State Tax Service or individual claimants, disputes as to the application of current or future Kyrgyz Republic laws relating to the Kumtor mine, the results of the State Commission review or any other future regulatory, civil or criminal claims impacting KGC or Centerra can be resolved without a material impact on the company.”