Kyrgyz Parliament Rejects Kumtor MoU

The parliament of Kyrgyzstan voted on October 23 to reject a Memorandum of Understanding (MoU) between Centerra Gold and the Kyrgyz government signed on September 9 regarding a potential restructuring of the ownership of the Kumtor gold mine (E&MJ, October 2013, p. 20). Under the MoU, Kyrgyzaltyn JSC would exchange its 32.7% equity interest in Centerra for a 50% interest in a joint-venture company that would own the Kumtor gold mine.

Kyrgyzaltyn JSC is a joint-stock company wholly owned by the Kyrgyz Republic. The Kumtor mine is located in the Tien Shan Mountains 350 km southeast of the Kyrgyz capital of Bishkek and accounts for about 12% of the country’s GDP.

The Kyrgyz parliament voted to cancel any agreements with Centerra and demanded a 67% interest in a new venture to be formed with the company. Parliament set a deadline of December 23 for the government and Centerra to conclude new negotiations regarding Kumtor ownership.

Protestors in the region of the mine had been calling for nationalization of the property. Kyrgyz President Almazbek Atambayev, who backed the MoU on creating a 50/50 joint venture with Centerra, rejected the calls to nationalize Kumtor.

Centerra issued a statement saying it “understands that the government of the Kyrgyz Republic continues to support the previously negotiated MoU. Centerra expects to continue discussions with the government with the objective of resolving matters through constructive dialogue, however, maintains that any agreement to resolve matters must be fair to all of Centerra’s shareholders.”

Centerra also said there can be no assurance that any transaction will be consummated or that the company will be able to successfully resolve any of the matters currently affecting the Kumtor project.

As featured in Womp 2013 Vol 11 -