Kyrgyz MPs order revision to contract with Centerra

Wed Jun 27, 2012 6:43am EDT
Email This Article |
Share This Article
  • Facebook
  • LinkedIn
  • Twitter
| Print This Article | Single Page
[-] Text [+]

By Olga Dzyubenko

BISHKEK (Reuters) - Kyrgyzstan's parliament rejected a motion to nationalize Centerra Gold's (CG.TO: Quote) flagship Kumtor venture, but gave a special commission until October 1 to prepare a revised contract with the Canadian investor.

The final resolution, approved on Wednesday by a 67 to 11 vote, said the Kyrgyz state must revise its 33 percent stake in Centerra Gold and must have a share in gold production from Kumtor, which accounts for about 60 percent of Kyrgyzstan's industrial output.

Shares in Centerra had plunged to a more than 2-1/2 year low last Friday after two days of heated debates in Kyrgyzstan's legislature, triggered by a 300-page report which accused the miner of afflicting immense damage on the country's ecology and the health of local villagers.

The parliamentary commission head said at the time that Centerra had done damage worth around $4 billion through its operations in Kyrgyzstan.

A draft resolution, backed mainly by the opposition, suggested the government should nationalize the Kumtor mine and said the government should create a state company which would sell some of its gold output to the central bank to replenish its reserves.

But after hours of wrangling, this bill was rejected by a 35 to 45 vote.

"Those who understand the gist of the matter realize that it is impossible (to nationalize Kumtor)," said deputy Ravshan Dzheyenbekov. "The legislature today demonstrated a well-balanced and mature approach."

A special commission will now to be formed by July 10, bringing together government members, parliamentarians, officials from the presidential administration and independent experts, to present by October 1 a revised contract with Centerra.   Continued...