The Kumtor gold mine, operated by Centerra Gold, is located 4,000 meters above sea-level in the permafrost and glaciers of the Tien-Shan Mountains. The mine has endangered the welfare of nearby communities and the environment. In May of 1998, a truck crashed through a bridge near the village of Barskaun and dumped over 1.7 tons of sodium cyanide (and 935 kg of cyanide) into the Barskaun River. The company did not notify residents of Barskaun, who use the water for drinking and irrigation, until 5 hours after the accident. As a result, over 2,500 people were poisoned, 850 people were hospitalized and at least four of those patients died.
For weeks, villagers exposed to the cyanide and the sodium hypochlorite that was used to treat the water and soil after the spill reported skin rashes, sores, and other ailments. Panic spread among the affected communities due to a lack of reliable public information about the impacts of these chemicals. Revenues sharply declined at nearby Lake Issyk Kul, Kyrgyzstan's most popular tourist attraction amid fears of contamination. Though estimates of the total damage resulting from the spill range from US $20 to 42 million, the mine reached an agreement with the Kyrgyz government to pay a mere US $4.5 million.
Despite the preventative measures that the International Finance Corporation (IFC) assured would be taken as a result of this incident, at least two more accidents occurred at Kumtor: one in July of the same year, resulting in a spill of 70 liters of nitric acid, and the other in January of 2000 when a truck spilled 1,500 kilograms of ammonium nitrate. In July of 2002, a Kyrgyz worker was killed when a 200 meter-high pit wall collapsed on him.
The Community Reacts
Fed up with the damage the mine continued to cause nearby communities, protesters temporarily blockaded the only road leading to mine in May 2007, demanding the company protect local ecology and hire workers from the community. Kumtor, which the government is in talks to nationalize, is also under investigation for tax fraud.
According to the Ministry of Environmental Protection, the mining sector is considered to be the main source of air and water pollution in Kyrgyzstan. As of 1995, 3,000 hectares of land were directly damaged by mining activities. Tailings dumps containing nearly 100 million m of waste (two million m of which is radioactive) are located in areas prone to earthquakes and landslides.
Lake Issyk-Kul is Kyrgyzstan's leading tourist attraction.
A Mixed Ownership
Following the collapse of the Soviet Union in 1991, the World Bank and the European Bank for Reconstruction and Development (EBRD) advised the Republic of Kyrgyzstan to exploit its gold deposits and privatize the mining industry.Hailed as a project that would “demonstrate to the international community the viability of mining projects in the Central Asian region,” the $452 million Kumtor project received funding from the EBRD, the U.S. Overseas Private Investment Corporation (OPIC) and the World Bank's Multilateral Investment Guarantee Agency (MIGA) and International Finance Corporation (IFC).
The Kumtor Gold Company (KGC) started as a joint venture between Kyrgyzaltyn, the state's gold mining agency, and Cameco Gold, a Canadian mining company and subsidiary of Cameco Corporation. In January 2004, the owners agreed to transfer all of KGC to a new Canadian company called Centerra Gold, the majority of which is held by Cameco Gold. Since 2007, a number of agreements and negotiations have taken place on ownership of the mine. As of August 2013, the Kyrzg government and Centerra are closing in on a deal that would give each stakeholder 50 percent ownership of the mine.
Kumtor mine is expected to remain open until 2019 and the Sarytor deposit will be mined in 2012 and 2013.