State of emergency declared to protect Centerra mine in Kyrgyzstan

May 31, 2013

A state of emergency was imposed by Kyrgyzstan’s government in order to protect Centerra Gold’s Kumtor mine from protesters who attempted to seize the mine.

Police on May 31 cleared away protestors who had been blocking the road to Kumtor for days and arrested 92 people, Prime Minister Zhantoro Satybaldiyev told a news conference.

Reuters reported that police used tear gas and stun grenades in clashes with villagers who tried to seize a substation and cut power supplies to the mine, a police spokesman said. Several protesters were hurt.

Days earlier, hundreds of villagers had blocked the road to Kumtor, in Dzhety Oguz district, and threatened to move on the mine if the government did not tear up its agreement with the company.

Toronto-listed Centerra Gold’s Kumtor Mine, hidden in the Tien Shan Mountains, is Kyrgyzstan’s largest gold deposit and helps to keep the country’s shaky economy afloat. In 2011 the mine contributed 12 percent to the country’s gross domestic product.

The villagers had put forward a list of demands to Centerra Gold, varying from building roads and a kindergarten and laying water pipelines to giving them long-term loans, offering them jobs at Kumtor, and buying equipment for local hospitals.

Centerra Gold, is under immense pressure in the Muslim nation of 5.5 million which has seen two presidents toppled since 2005.

Kyrgyz nationalist deputies and groups are calling for the nationalization of the mine - the biggest gold venture run by a Western company in Central Asia - and parliament has set a deadline of June 1 for the government to renegotiate or repudiate - a 2009 deal struck with Centerra to operate Kumtor.

A state commission said Centerra had been paying too little to run Kumtor and accused it of causing environmental damage.

Prime Minister Satybaldiyev said the government would miss the deadline as it needed more time for talks with Centerra.

“They agree to establish a joint venture by unbundling Kumtor from Centerra and registering it in Kyrgyzstan. If such joint venture is created, cash flow will double,” he said without giving further details.

Kyrgyzstan currently owns a third in Centerra Gold. Kumtor is Centerra's core asset.

Centerra had estimated production of between 550,000 and 600,000 ounces from Kumtor in 2013, up sharply from last year's 315,238 when ice movement in the pit slashed output.



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