June 1, 2013 / 11:48 AM / 4 years ago

Centerra Gold to restart Kumtor, tension high after unrest

* Fuel, power supplied to Kumtor after two days of idle ore output

* Passions still running high in southern Jalalabad region

* Government wants to unbundle Kumtor from Centerra to reap more cash

By Olga Dzyubenko

BISHKEK, June 1 (Reuters) - Centerra Gold said on Saturday it had sent fuel to its flagship Kumtor mine in Kyrgyzstan, hoping to restore output cut by protests and power outages as local villagers demand the venture be nationalised.

However, tension remained high in the town of Jalalabad in southern Kyrgyzstan, where a crowd of anti-Centerra protesters seized the regional administration building on Friday, demanding that the government cancels its deal with the Canadian investor.

On Friday, President Almazbek Atambayev imposed a state of emergency in Dzhety Oguz district in the northern Issyk Kul region after clashes between villagers and police. Kumtor, the country’s largest gold deposit, is located in this area.

Hundreds of protesters blocked the only road to Kumtor on Tuesday. Late on Thursday they seized a substation and cut off power to the mine. Power supplies were restored on Friday morning after police intervened, but were cut off again later after protesters sized the same substation.

Power was restored to Kumtor on Saturday, the Kyrgyz government press service quoted Deputy Prime Minister Taiyrbek Sarpashev as telling Rodney Stuparyk, vice president of Kumtor Operating Company (KOC), which runs the mine.

Stuparyk said Kumtor had not produced ore for two days.

Fuel supplies were sent to the mine on Saturday afternoon, KCO spokesman Sergey Dedukhin said.

“Mining works will resume when it is received. The company will try and do its best to make up for the lost time and achieve planned production levels,” he added.

Toronto-listed Centerra’s shares fell 15 percent to C$3.52 on Friday after the miner said it would not be possible to determine the extent of the impact on its production and results until grid power was restored at the mine.

Kutor, hidden in a permafrost area in the Tien Shan mountains at some 4,000 metres (13,000 ft), is the largest gold mine in Central Asia run by a Western company and alone made up 12 percent of Kyrgyz gross domestic product in 2011.

But Toronto-listed Centerra has come under immense local pressure in the mainly Muslim nation of 5.5 million, which has seen two presidents toppled by revolts since 2005 and where powerful local clans defy the authority of central government.

A state commission has said the firm is paying too little to run Kumtor and accused it of damaging the environment, while protesters in the north have raised demands ranging from jobs at Kumtor to building roads.

Kyrgyz Prime Minister Zhantoro Satybaldiyev said on Friday the government would miss the June 1 deadline given it by the parliament to renegotiate or repudiate the 2009 agreements with the investor. He did not rule out the deal could be cancelled.

Visiting northern Kyrgyzstan on Saturday, he reiterated to locals that the government was proposing to unbundle Kumtor from Centerra Gold and register the new venture in Kyrgyzstan, which he said would boost revenues to Kyrgyzstan’s state coffers.

Meanwhile, hundreds of people were still occupying the administration of the southern Jalalabad region which they seized on Friday, demanding that the government annuls its deal with Centerra to run Kumtor and frees a jailed parliamentarian.

They burned car tyres on Saturday to attract more attention and supporters, but the town was generally calm, police said.

The Kyrgyz Prosecutor General’s office ordered a probe into attempted seizure of power by force in Jalalabad, saying the protesters had even proclaimed a new regional governor.

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