Canada's Centerra escalates Kyrgyz dispute to arbitration

Tue May 31, 2016 7:58am EDT
 
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BISHKEK May 31 (Reuters) - Canadian miner Centerra Gold , whose main asset is the Kumtor gold mine in Kyrgyzstan, has taken to international arbitration its dispute with the Central Asian state over profit sharing, the company said on Tuesday.

Kyrgyzstan had long sought to renegotiate its agreement with Centerra and secure a bigger share of income, but said last December that negotiations had fallen through.

This month, a local court fined Kumtor Operating Company, Centerra's local subsidiary, about $100 million following a lawsuit from an environmental safety regulator. Another regulator has filed a $230 million lawsuit against the firm.

Kyrgyz prosecutors raided the company's offices last month to collect documents related to a separate criminal case alleging financial violations by the firm - which Centerra said was related to a $200 million inter-corporate dividend.

Finally, last week Kumtor Operating Company said it would be forced to halt operations at the mine unless it receives environmental permits to continue beyond June.

In a statement on Tuesday, Centerra said its arbitration filing covered all those issues.

"The arbitration proceedings will be held at Stockholm, Sweden and will be conducted under the UNCITRAL rules of arbitration and the governing law will be the law of the State of New York," it said.

UNCITRAL is the core legal body of the United Nations system in the field of international trade law.

"Despite the commencement of arbitration proceedings, the Company has re-iterated to the Kyrgyz Republic Government its openness to receive and discuss proposals to resolve all outstanding matters affecting the Kumtor project in a manner that is fair to all of Centerra's shareholders," it added.

Kyrgyz officials in charge of Kumtor operations could not be reached for comment on Tuesday. (Reporting by Olga Dzyubenko; Writing by Olzhas Auyezov, editing by David Evans)