Probe Alerts

Probe Alert October 1998

(October 1998) On May 20, a truck carrying sodium cyanide to the Kumtor Gold Company – two-thirds owned by the government of Kyrgyzstan in the former Soviet Union and one-third owned and operated by a subsidiary of the Saskatchewan-based Cameco Corporation – overturned into the Barskoon River, spilling nearly two tonnes of deadly cyanide.

The Barskoon River flows into Lake Issyk Kul, the country’s biggest lake and largest tourist attraction. Since then, it is reported, as many as 2,500 people were poisoned, 800 hospitalized, and four died as a result of the accident.

Company officials, however, deny responsibility for the deaths and illnesses. The president of Kumtor Gold, Len Homeniuk, claimed that “there’s no documented Western evidence out there that there was cyanide poisoning” and that “in the scheme of things” the accident “was a relative non-event. There was no one poisoned; there’s no one really sick from it. It’s just that the hysteria caught on afterwards.”

Cameco officials did, however, admit that “an error was made in failing to alert the nearby communities of Barskoon and Tamga as soon as possible” of the spill. The company tested the water immediately after the accident and found cyanide levels as high as 78.6 mg/l, a level high enough to cause concern about human health effects, but failed to inform local authorities of the spill for five hours. Cyanide breaks down quickly in water, but, according to Canadian Department of Health expert John Harrison, who went to the site of the accident, if a person drank some of the water “within perhaps up to 24 hours after the exact spill, they would probably get a good size dose.” Although 5,000 residents of the Barskoon village were evacuated to the northern side of Issyk Kul lake for a week in June, it was probably too late. It is reported that local medical authorities believe that the cyanide spill led to the four deaths, and that a Kyrgyzstani parliamentary investigation into the accident is expected to come to the same conclusion.

To complicate matters, apparently sodium hypochlorite was spread on the road and bridge area where the accident occurred, in order to neutralize the sodium cyanide spill. This could have caused the persistent ailments such as rashes that continued for weeks after the spill.

The financiers of this tragedy are all too familiar to Probe Alert readers. This mine cost US$452 million. Over two-thirds of that financing came from the private sector, including Cameco, Chase Manhattan, the Bank of Nova Scotia, and the Royal Bank of Canada. But these private financiers had nearly all of their equity investment and loans insured by Canada’s Export Development Corporation and its U.S. equivalent, the Overseas Private Investment Corporation. That means Canadian and U.S. taxpayers are taking the risk that these private banks and Cameco refused to take. But taxpayer support doesn’t end there. Nearly one-third of the financing needed to start the mine was supplied by taxpayers through loans from the Export Development Corporation, the European Bank for Reconstruction and Development, and the World Bank’s International Finance Corporation. As a Cameco executive explained to a mining industry gathering, “the inclusion of the multilateral banks was critical to the Project financing and was viewed as an essential mechanism for mitigating political risk.”

We have now learned that tensions continue to mount in Kyrgyzstan as a second chemical spill occurred on July 22. Seventy litres of nitric acid were reported to have leaked from a truck on its way to the mine.

Community leaders and members of parliament are demanding action. On July 7, non-governmental organizations held a protest outside government offices and the offices of the Kumtor Operating Company to call for the mine to be closed until an independent investigation is completed. Also, it has been reported, a parliamentary commission investigating the accident is expected to call for the mine to be shut down until an independent investigation is completed and for all people and organizations responsible for the accident to be punished. On July 11 and 12, local residents blocked the road to the mine, preventing trucks from getting to the mine. They demanded compensation to residents and an independent investigation of the mine operation.


What You Can Do . . .

Please write to the Honourable Paul Martin, Canada’s Finance Minister and our Governor to the World Bank, expressing your concern about this inappropriate use of Canadian tax dollars and urging him to ensure justice for those harmed by this overseas Canadian mine. Those responsible for the accident must be held to account:

The Kumtor Gold Company mine should be shut down until

  • an independent investigation into its operations is completed, and
  • compensation is paid for damages to property and human health.
  • Furthermore, public institutions should stop covering private risks with public funds. Canada’s Export Development Corporation and international institutions such as the International Finance Corporation and the European Bank for Reconstruction and Development should stop receiving Canadian tax dollars to dole out corporate welfare for environmentally damaging and commercially risky projects.

    Letters should be directed to:
    The Honourable Paul Martin, Member of Parliament
    Esplanade Laurier, East Tower, 21st Floor
    140 O’Connor St.,
    Ottawa, ON
    K1A 0G5

    Remember, when you address a letter to a member of Parliament you don’t need to put a stamp on your envelope!

    If you can, please send us a copy of your letter and any responses that you receive.


    News Briefs

    Laos — Not even the economic crisis sweeping Asia can shake the World Bank’s commitment to the Nam Theun 2 hydro dam in Lao PDR. The dam’s developers have no customers for the power and no commercial lenders willing to risk their capital on the US$1.3-billion venture.

    The World Bank claims that the 681-megawatt dam will generate US$250 million annually from electricity exports, but the only prospective buyer, Thailand’s Electricity Generating Authority (EGAT), has a glut of generating capacity at home and no money to buy power from Lao PDR.

    To cajole private investment in Nam Theun 2, World Bank officials reportedly want to lend EGAT the money to buy the power it can’t afford and doesn’t need. The World Bank is also prepared to guarantee loans from commercial lenders who otherwise reject Nam Theun 2 as “unbankable.”

    Last November, the World Bank’s vice-president of its East Asia and Pacific department, Jean-Michel Severino, visited Lao PDR to grant the Nam Theun 2 developers nearly US$1 million for resettlement and environmental planning. If completed, the dam would flood more than 450 square kilometres of the country’s largest biodiversity conservation area, forcing more than 5,000 people into state-run settlements.

    Thailand — Four years after the World Bank-financed Pak Mun dam in Thailand began operating, the World Bank has released a report admitting that compensation for lost fishing income and resettlement planning was poorly handled and inadequate. But the report, prepared by Warren Van Wicklin III of the World Bank’s operations evaluation department, also says that the people who were compensated complain too much. “There is such a culture of complaint, of trying to win sympathy for even greater compensation claims and assistance, that it is difficult to get affected people to be balanced about their resettlement experience,” writes Wicklin.

    Meanwhile, only half the claims for fisheries compensation have been settled. About 3,000 households received US$1,200 each, the cash equivalent of one year’s fishing income, regardless of whether they fished part time for their own consumption or earned most of their living from fishing. Twice that amount for each household was deposited in government-run cooperatives, even though villagers had demanded the entire payment in cash.

    United States — For most of this century, politicians eagerly rushed in, amid cheering crowds, to claim credit for the construction of dams. They built dams for barge traffic, for electricity, for irrigation, for drinking water, for flood control. In America alone, 75,000 dams have been built. But the public is now learning that society has paid a steadily accumulating price for these projects. Fish spawning runs have been destroyed, flows have become nonseasonal, wedges of sediment have piled up behind structures, and delta wetlands have been degraded by a lack of fresh water and by an intrusion of saltwater. Meanwhile, many of the dams have not provided the promised benefits. They were built with taxpayer subsidies, then justified by dubious cost-benefit projections. That is why on June 17, 1997, Interior Secretary Bruce Babbitt took the first crack with a sledgehammer to dismantle the first of four dams on the Menominee River flowing between Wisconsin and Michigan. By August 4, 1998, six more had been removed. The Edwards dam in Maine may be removed by next summer. Active campaigns are now under way to demolish four dams on the Snake River and the Savage Rapids dam in Oregon and to drain the Powell reservoir on the Colorado River to restore Glen Canyon.


    PROBE ALERT is published by Probe International, a charitable organization that monitors the environmental and social impacts of Canadian-financed development projects in the Third World. If you have questions or comments regarding the material in this or other issues, or if you don’t wish to receive PROBE ALERT, contact The Editor, PROBE ALERT, 225 Brunswick Ave., Toronto, Ontario, M5S 2M6, call (416) 964-9223, e-mail

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