“As a significant investment partner of the Kyrgyz Republic, Canada is very concerned about continued developments in the mining sector,” Canadian Foreign Affairs Minister Marc Garneau and International Trade Minister Mary Ng said in a joint statement on Monday.
“Canada is also disappointed that this dispute between foreign investors and the Government of the Kyrgyz Republic was not allowed to be resolved transparently by the parties working together.”
Centerra initiated on Sunday binding arbitration against the Kyrgyzstan government, after the parliament passed a law allowing the state to temporarily take over the company’s Kumtor gold mine, the country’s biggest industrial enterprise.
Late on Monday, Centerra also placed restrictions on the sale of shares held by state-owned Kyrgyzaltyn JSC, which has a 26% stake in the Canadian mining company.
The miner also said it had accepted the resignation of Kyrgyzaltyn nominee Tengiz Bolturuk from the board with immediate effect, adding it did not intend to make any further public comments regarding this matter unless required by law.
“Rest assured that we’re taking all measures possible to ensure that we’re protecting the rights of the organization and the rights of our shareholders,” Perry said on Tuesday.
Kumtor, which accounts for a fifth of the ex-Soviet country’s total industrial output, has produced more than 13.2 million ounces of gold between 1997 and the end of 2020. Last year’s output was slightly over 556,000 ounces.
Multi-year degradation
Dalton Baretto of Canaccord Genuity said in a note last week that he wasn’t surprised by Kyrgyzstan’s move.
“We have been anticipating something like this since President Japarov took power on January 10; however, the speed and breadth of these reforms has caught us off-guard,” he wrote.
The analyst added he believed the government has opened the door to what is likely going to be a multi-year degradation of the relationship between Centerra and the Kyrgyz State.
“While Centerra Gold will leverage all available avenues of international trade disputes, we believe these are unlikely to be effective in the long term,” Baretto anticipated.
Kumtor has been the focus of a number of disputes between the company and the Kyrgyz government.
Japarov, who seized power after violent riots last October, once campaigned for the nationalization of the mine. After assuming the post, however, he said he no longer considered it necessary.
Kyrgyzstan has a history of popular uprisings and political turmoil, ever since gaining its independence after the collapse of the Soviet Union in 1991. Protesters had ousted two prior PMs in revolutions in 2005 and 2010.
