Centerra Gold seeks international arbitration for dispute with Kyrgyzstan
Canada’s Centerra Gold (TSX:CG) has taken its dispute with Kyrgyzstan over the firm’s vast Kumtor gold mine to international arbitration, following the Central Asian country’s string of penalties and fees the firm considers to be without merit.
The company said the arbitration proceedings will be held at Stockholm and Sweden, and that they will be conducted under the UNCITRAL rules of arbitration and the governing law of New York.
UNCITRAL is the core legal body of the United Nations system in the field of international trade law.
Centerra’s move comes as a local court hit its subsidiary, Kumtor Operating Company, with a $10,000 fine, following a lawsuit from an environmental safety regulator. Another court ordered the firm last week to pay almost $100 million in fees related to their mine waste.
The miner’s decision also follows last month’s actions by Kyrgyz prosecutors, which raided the company’s offices to collect documents related to a separate case. That suit alleges financial violations by Centerra, which the firm said were related to a $200 million inter-corporate dividend.
Kumtor, Kyrgyzstan’s largest gold mine, has been a source of political tension in the impoverished country.
For more than two years the Central Asian nation and the gold miner have been locked in a bitter dispute over Kumtor’s structuring.
Centerra once suggested a 50/50 joint venture, but former prime minister Joomart Otorbayev said last year that such deal would not be in the country’s interests. Rumours pointing to an imminent nationalization of the mine quickly spread out after that, but were later denied by Kyrgyzstan authorities.
Otorbayev resigned later that month after failing to clinch the restructuring deal. His successor, Temir Sariyev, said at the time that resolving the issue would be among his priorities.
The vast open pit Kumtor gold mine, which lies near the Chinese border at an altitude of 4,000 metres, is expected to produce 480,000-530,000 ounces at an all-in sustaining cost between $817-$902 per ounce this year.