Export Credit

Fatality at troubled Kumtor Gold Mine

July 10, 2002

The July 8 death of a Kyrgyz national, who was buried in the collapse of a 200 meter high pit wall at the Canadian-owned Kumtor Gold Mine in Kyrgyzstan (Central Asia), has prompted renewed calls for an independent, third party environmental and safety audit of the mine.

This latest incident follows three chemical spills at the mine, which is operated by Cameco Corporation of Canada and is jointly owned by Cameco and the government of Kyrgyzstan. Cameco has indicated its willingness to cooperate with an investigation into the incident by the Kyrgyz Ministry of Environment and Emergencies.

However, a coalition of environmental organizations and civic leaders in Kyrgyzstan, Canada, Hungary and the United States are calling for an independent and comprehensive audit that addresses all of the safety and environmental concerns at the mine. The coalition also announced that they would assemble a team to perform the audit.

“We must remember the troubled history of this mine, Cameco must allow an independent investigation of the mine’s safety and environmental practices,” said Kalia Moldogazieva of the Human Development Center in Kyrgyzstan. “Any responsible operator would welcome such an audit. They should have nothing to hide.”

In January 2000, a mine truck dumped 1.65 tons of ammonium nitrate; 70 litres of nitric acid spilled in July 1998; and on May 20, 1998, a mine truck spilled 2 tons of cyanide into the Barskoon River, a local drinking water and agricultural water source. Government and health officials attributed a number of human fatalities and many illnesses to the cyanide spill. Various reports listed the number of deaths at one, four or zero. The Kumtor Gold Company, the Kyrgyz government and others disputed the reported deaths and a World Health Organization report was unable to verify any deaths, although they were not given full access to all medical records. There is no dispute that many illnesses followed the spill – 2,600 people were treated and more than 1,000 hospitalized.

In the aftermath of this spill, the Kumtor Gold Company rejected a request by NGOs for an independent mine audit. While access to the mine has since been granted to some, a full, independent environmental and safety audit has not been allowed.

Since the 1998 spill, a number of additional problems have surfaced creating new tensions between civil society groups and Kumtor/Cameco. These include an unwillingness to release a new emergency response plan for public review, disputes over fair compensation after the cyanide spill, the impact that pollution from mine tailings (waste) could have on water resources in the region, melting of the permafrost at the mine location and the lack of an adequate plan for mine reclamation and closure.

Because of the troubled history of the mine and its growing list of potential problems, in addition to the environmental/safety audit, the NGO and civic leader coalition called for the public release of all environmental and safety monitoring data, and public release of all existing information related to planning for reclamation and closure, once the site has been deemed stable and safe. The coalition also announced that it would soon select an international audit team and request that the company and government give them full access to the site. The team will be comprised of both international and Kyrgyz experts. NGOs also called on public and private financial institutions to support this independent audit.

“In 1998 we went to the site, at the request of civil society groups in Kyrgyzstan and members of parliament. The company denied us access. This was a mistake. Full disclosure is the only way to begin to address these issues in a constructive manner” said Stephen D’Esposito, President of Mineral Policy Center in Washington D.C. “Responsible companies should support full disclosure, they should open their environmental and safety records to public scrutiny and they should let our experts on the site.”

“Once again we see evidence that publicly funded financial institutions are unable to assure those who live near and work at projects they fund are safe. The lesson here is that public financial institutions should use the leverage that they have to ensure safety and sound environmental practices. Until they do, toxic spills and tragic accidents will continue in the mining sector,” said Jozsef Feiler of CEE Bankwatch in Hungary.

“Canadian companies operating overseas have an obligation to follow the highest standards. The only responsible action that Cameco/Kumtor can take today, after yet another tragic mishap, is to open the mine to public scrutiny. Those directly affected by this mine have a right to know what’s happening today and to get answers to questions they have about their health, their water, and their community. The Canadian government should support this position” said Joan Kuyek of MiningWatch Canada in Ottawa.

The EDC Connection

At a cost of US$452 million, over two-thirds of the money raised to finance the Kumtor Gold Mine came from from the private sector – financiers 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 one 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.”

To voice your concern to the Export Development Corporation at how your Canadian tax dollars are being spent, e-mail Yolanda Banks, the Corporate Representation Advisor for EDC, at ybanks@edc-see.ca. Ask Yolanda what action the EDC is taking in the investigation of the fatal July 8 accident at the Cameco-owned Kumtor Gold Mine in Kyrgyzstan, and please CC your e-mails to us at ProbeInternational@nextcity.com.

The mountainous landscape where the Kumtor mine is located.

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