Wednesday, June 20, 2012 -
The Kyrgyz parliament will hold an extraordinary session on Friday to debate nationalizing the Kumtor mine, operated by Canadian miner Centerra Gold.
The nationalization recommendation is buried within an 800-page study of Kumtor Operating Company by a parliamentary commission that criticizes the miner for violations.
“The resolution of the Parliament contains a paragraph on nationalization of Kumtor mine,” commission member Maksat Sabirov told the local independent 24.kg news agency.
The commission report also unveiled a dozen violations by the miner, he said.
“They inflicted serious damage to the environment of the country. Kyrgyzstan has to defend its interests and nationalize Kumtor,” said Sabirov.
But Kyrgyz experts have warned against taking such action.
“Kumtor should not be nationalized. The path of nationalization is easy, but is fraught with consequences. We get monetary advantages up front, but no investor will look at us in the future because we have not respected their rights. And then what do we do?” said Tolonbek Abdyrov, chief of the Institute of Public Administration at the Academy of Management under the President, the Knews.kg news agency reported.
An analyst at the Central Asian Free Market Institutewarned that nationalizing Kumtor would cause great harm to the company.
“Our government does not have the ability and resources to manage it. Thus the company may break up,” Aziz Issa told Knews.kg news agency.
He added that the move would also have a negative impact on the company’s stock price on the markets.
“Nationalization will also send a signal that our government and parliament are unreliable and at any moment they can nationalize all they want,” Isa said.
Centerra Gold's Chief Financial Officer Jeff Parr told Central Asia Newswire on Wednesday that he does not believe the commission will lead to the nationalization of the Kumtor gold mine.
"This is a parliamentary commission that was formed by the opposition," he said in a phone call from Toronto, where the firm is headquartered. "This kind of stuff goes on in Kyrgyzstan and we don't expect that it's going to lead to anything."
Parr said he has read a summary of the commission's report and found it "grossly inaccurate."
The gold mine is operated by Canadian firm Centerra with the Kyrgyz government owning a 33 percent stake. The gold mine generates around 10 percent of the national budget.
But its production levels have been hit hard by strikes and politicized industrial action that has resulted in undermining the government’s budget plans.