Centerra Gold Inc. has filed an application requesting urgent interim measures in its international arbitration against the government of the Kyrgyz Republic and Kyrgyzaltyn JSC, the state-owned gold refining monopoly and Centerra’s largest shareholder, to address critical operational and safety problems at the Kumtor mine. Official statement of the company says.
As noted, through this application, Centerra seeks to prevent the Kyrgyz Republic and Kyrgyzaltyn JSC from causing irreparable damage to the mine, destroying its integrity, value and long-term viability.
As previously disclosed, Centerra initiated binding arbitration against the Kyrgyz government in response to actions taken against the Company’s wholly owned subsidiary Kumtor Gold Company (KGC), to expropriate the Kumtor mine under the guise of «external management» and strip KGC of its assets.
«Statements by Kyrgyz officials since the government’s illegal seizure of the Kumtor mine indicate that they are departing from the approved mine plan in ways that will cause irreversible damage. Based on recent reports, the government has also failed to adequately protect the mine’s infrastructure from flooding and other threats and may be facing production difficulties. Their actions, and threatened actions in pursuit of short-term profits at the expense of sustainability, place the long-term viability of the Kumtor Mine at grave risk and compromise the safety and livelihoods of its employees,» Dan Desjardins, the Chief Operating Officer of Centerra said.
Centerra seeks the following immediate relief pending a final award in the arbitration:
- An order directing the Kyrgyz Republic to refrain from deviating from the government-approved 2021 Kumtor Mine Plan and to provide Centerra with regular reports on the mine’s operations;
- An order directing the Kyrgyz Republic and Kyrgyzaltyn JSC to refrain from transferring any Centerra shares or KGC assets without a prompt accounting and payment of profits that otherwise would have been payable to the Company into an escrow account; and
- An order directing the Kyrgyz Republic and Kyrgyzaltyn JSC to refrain from interfering with the arbitration process, including through spurious fines, tax claims and legal proceedings, and intimidating or threatening Centerra’s employees and agents.
Under applicable investment agreements, Centerra’s claims will be adjudicated in arbitration proceedings to be held in Stockholm, Sweden and conducted under the rules of the United Nations Commission on International Trade Law (UNCITRAL). The Permanent Court of Arbitration (PCA) has appointed The Rt. Hon. Lord Hoffmann as the sole arbitrator of the matters in dispute and the governing law of the arbitration is the law of the State of New York and of England.
Centerra’s application states that the Kyrgyz government and its agents are jeopardizing the Kumtor mine itself and Centerra’s ability to receive any award at the conclusion of the arbitration as a result of the following egregious acts of mismanagement:
- Maximizing short-term output in pursuit of a quick profit will reduce the life of the mine;
- Improper operation of specialized water pumps could destabilize and collapse the pit wall;
- Transitioning to underground mining risks irreversible damage.