Centerra Says Seized Kyrgyzstan Mine Flooded, Endangering Site
Centerra Says Seized Kyrgyzstan Mine Flooded, Endangering Site
(Bloomberg) -- Centerra Gold Inc. is claiming a Kyrgyz open-pit mine it once ran has flooded and poses safety and environmental risks, although the government-appointed administrator says the water has always been there.
Kumtor’s administrator said in response that the amount of water has always been present and it’s used for the mine’s needs, according to a statement Wednesday. It added that the information presented by Centerra “doesn’t correspond with reality” and is an effort to “undermine the reputation” of the administrator.
Centerra’s concerns stem from the fact that it owned and operated the mine through subsidiary Kumtor Gold under a 2009 agreement with the government, before the Kyrgyz Republic seized the facility in May on environmental grounds and tax issues. It’s now the subject of international arbitration initiated by Centerra. Kumtor Gold filed for Chapter 11 bankruptcy in New York on May 31.
Centerra has also called for discussions on the issue, but the Kyrgyz government said in June that it will be extremely hard to build a dialog. The Toronto-based company now alleges that current management is not providing the resources necessary to safely operate the mine, thus endangering Kumtor workers and threatening the sustainability of the entire operation.
“Water in an open-pit mine decreases stability and increases the risk of a wall failure,” Centerra Chief Operating Officer Dan Desjardins said in an emailed statement. “For Kumtor, pumping water out of the mine and treating it properly to remove contaminants has always been critically important to the safe operation of the mine given its proximity to glaciers.”
A buildup of water could penetrate pit slopes and cause potential contamination of nearby waterways, said Gavin Wendt, a senior resource analyst at MineLife Pty. There’s also a risk of subsidence, which would be extremely time-consuming and costly to resolve, as well as being potentially fatal for any workers operating within the mine itself.
“The primary issue of water residing in an operating mine is the danger presented by instability to the pit itself,” Wendt said. “Typically, water and mines don’t mix.”
Desjardins, who managed the mine for five years as the president of Kumtor Gold until January 2020, has urged the management to retain independent mining experts to assess the condition of the mine and to publish the findings.
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