Proposed Kyrgyz ‘glacier law’ could impact on Centerra’s Kumtor mine

25th April 2014 By: Henry Lazenby - Creamer Media Deputy Editor: North America

Proposed Kyrgyz ‘glacier law’ could impact on Centerra’s Kumtor mine

Photo by: Reuters

TORONTO ( – Canadian miner Centerra Gold this week said that it was unclear as to how a new law passed by the Parliament of Kyrgyzstan would affect its flagship Kumtor mine, which is bisected by a glacier.

The Kumtor mine is located 4 000 m above sea level, and is the largest gold mine in Central Asia operated by a Western company. It is the industrial centrepiece of the Kyrgyz economy, alone contributing 12% of gross domestic product in 2011.

Centerra on Thursday said that it understood that Parliament passed a law prohibiting activities that affect glaciers in the republic. The ‘glacier law’ must first be signed by the Kyrgyz President before it would take effect.

Centerra had not yet received the official version of the law and noted that several of its provisions were unclear.

The new law also contains provisions for paying compensation for damages to glaciers, at rates to be determined by the government.

However, Centerra believed that the stabilisation and non-discrimination provisions contained in the agreements governing the Kumtor project and the law of the country supported its view that the glacier law would not apply to Kumtor mining operations.

Centerra added that it also believed that any disagreement regarding the application of the glacier law to Kumtor would be subject to the dispute resolution (international arbitration) provisions of the Kumtor project agreements.

From its start in 1994, limited measures to manage glaciers and ice had been a feature of mining operations at Kumtor and have been the subject of frequent Kyrgyz regulatory oversight and approval, as well as review by international technical and environmental experts, including experts retained by the European Bank for Reconstruction and Development in connection with the extension of a credit facility to Centerra.

“In view of the strategic importance of the Kumtor project to the Kyrgyz Republic, we believe that the glacier law is unlikely to be enforced in a manner that would require the project to suspend mining activities. We also note that in all our dealings with successive governments of the Kyrgyz Republic, such governments have consistently and emphatically stressed the strategic importance of Kumtor to the Kyrgyz Republic and that mining operations at the project continue uninterrupted, notwithstanding any disagreements that may arise between Centerra and the government regarding the project.

“We also note that the President of the Kyrgyz Republic has the discretion to reject the glacier law and return it to Parliament for further consideration,” Centerra said.

However, the company conceded that there could be no assurances that Kyrgyz regulatory authorities would not enforce the glacier law, with the potential for mine operations to be suspended or terminated, or that the government would not make substantial claims for damages for past or future activities affecting glaciers.