The Kyrgyz Government has seized control of Centerra Gold’s Kumtor gold mine in the southern Tien Shan Metallogenic Belt.

The government plans to install external management at the mine, which is claimed to be one of the largest of its kind operating in Central Asia.

Confirming the move, Centerra said in a press statement: “Consequently, Centerra is no longer in control of the Kumtor mine and can no longer ensure the safety of the mine’s employees or operations.”

Centerra has expressed its willingness to engage in constructive talks with the government on this matter.

As of now, the company has disabled access of local KGC employees in the Kyrgyz Republic to Centerra’s global IT systems to restrict unauthorised intrusion.

The move comes shortly after the Canadian firm initiating arbitration proceedings against the government in a legal battle involving the gold mine.

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By GlobalData

This was in response to the government passing a bill that threatened the takeover of the Kumtor mine in the event of the firm breaching environmental standards.

Centerra said that the latest action by the Parliament of the Kyrgyz Republic violates its rights in the Kumtor Mine.

It also violates the government’s obligations to Centerra and mine operator Kumtor Gold Company (KGC), under investment agreements.

Earlier this month, Centerra was also fined $3.1bn by a district court in Kyrgyzstan owing to the violation of the country’s certain environmental laws.

In a press statement, Centerra said: “No assurances can be given that any of the current or future legal claims and other disputes that have arisen in relation to KGC or the Kumtor Mine can be resolved without a material impact on the company or potentially the loss of Centerra’s entire investment in the Kumtor mine.”

Earlier this year, Centerra unveiled plans to invest $2bn to extend the operational life of the mine by five years to 2031.

Meanwhile, the recent actions by the Kyrgyz Government over the mine were criticised by the UK and Canadian embassies.

In support, Canadian Foreign Affairs Minister Marc Garneau and Canadian Small Business, Export Promotion and International Minister Mary Ng said in a joint statement: “As a significant investment partner of the Kyrgyz Republic, Canada is very concerned about continued developments in the mining sector.

“This will potentially have far-reaching consequences on foreign direct investment in the Kyrgyz Republic.”