Interviewing the EBRD about the Kumtor gold mine

Briefing    |    14 May 2015

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This interview was conducted during the EBRD annual meeting and business forum, 14-15 May 2015 in Tbilisi. The interview was led by Ryskeldi Satke (RS) with Dr. Alistair Clark (AC), EBRD’s Managing Director Environment and Sustainability Department; Michaela Bergman (MB), EBRD’s Chief Counselor for Social Issues Environment and Sustainability Department; and Dr. Dariusz Prasek (DP), Director, Project Appraisal Environment Department.

RS: in Kyrgyz Republic, Centerra Gold operated gold mining project has a number of issues and EBRD has a debt facility with the Canadian miner. First issue is related to the human rights record with the Kumtor mine. In 2013, local communities near the mine were protesting against the project. Protesters were not happy with the drinking water and not satisfied with the benefits from the Kumtor mining. During the protest in October 2013, scores of community activists have been arrested by the Kyrgyz Government, four of them were sentenced last year to 4-8 years prison time, four were given probation, another four released on bail and 54 more forced to flee the country over arrest warrants. The country’s human rights record remains a concern over systemic issues such as torture and ill-treatment of prisoners. Was EBRD updated on human rights violations regarding Kumtor mine operations?

AC: In terms of the human rights record of Kyrgyzstan, that’s an integral part of EBRD’s policy towards the Kyrgyz government. If there are issues with human rights, we would certainly raise this subject with the Kyrgyz authorities through our resident office. Human Rights does feature in the articles that have established EBRD, we have a political mandate as well. For instance, we have a very hard line in Uzbekistan on human rights issues and the result of that is that EBRD is not active in Uzbekistan. Other International Financial Institutions are active there but EBRD is not and the net result was that we were no longer welcome. We apply what is called a calibrated approach, for example in Turkmenistan and Belarus where the democratic freedoms are not established as we would like. Due to that EBRD has a restrictive lending portfolio. And I’m not aware of discussions on calibrated approach for Kyrgyzstan.

MB: No, we haven’t had a discussion on Kyrgyzstan and quite frankly, I think it’s because that Kyrgyzstan has always been held up as a beacon and I know we looked into some other issues such as minority in the South. But I am not aware of the other issues via political counselors.

RS: Few facts about human rights issues related to the Kumtor mine. Four of the arrested and imprisoned community activists, who rallied against the mine, were tortured. These allegations were investigated and documented by the Kyrgyz State Ombudsman. Ombudsman filed a lawsuit with the Kyrgyz court to encourage further investigations into the case but obviously, this case has become political and was dismissed. But Kyrgyz Ombudsman’s files are accessible for public.

AC: It would be good to have more specific information on that so we can make sure that we look into it.

RS: I’m surprised that EBRD is not aware of this case. Bank has an office in Bishkek and this is a high-profile case in Kyrgyzstan for more than two years now.

AC: It certainly didn’t make it to our desk.

MB: It didn’t make it to our desk. We do go to Kyrgyz Republic two or three times a year and I didn’t know about this.

RS: So you were not aware of any of this.

MB: We always as a bank have said that we want to consult if people have issues and people are free to raise issues and we could see what we can do. No we are not aware of this case and I think it’d be good to have more information.

AC: One thing we are interested in is where these people are because there aren’t really local residents to the mine. The nearest village is 30 kilometers away

RS: These are the local residents from the villages near the mine. Over a dozen villages were impacted by gold mining. Primarily, we are talking about the quality of the drinking water. Children in these villages were frequently having a diarrhea and hepatitis and it is similar to what’s happening in Mongolia with Centerra Gold’s mining project there. I was in Mongolia recently. We have similar reports and similar issues in both Kyrgyzstan and Mongolia. Drinking water is one of the compaints.

AC: But if you can get this information to us we will certainly follow up because it’s obviously a key project.

RS: I have written series of articles on the subject since last year which were published by The Diplomat magazine, Asia Times and by CEE Bankwatch also. I’ll forward the publications to you. Now, the second issues is related to EBRD audits of the Kumtor mine and Centerra Gold projects in Mongolia. Last audit in Kyrgyz Republic was done in 2009 and in Mongolia in 2010 by independent environmental consultant retained by EBRD. The bank issues a statement on audits and stated that due diligence was in compliance with the bank’s performance requirements and the company (Centerra Gold) was operating in line with the principles of international best practice. That’s the quote. As I highlighted the issues with Kumtor, we have a reports about the local populace near the mine complaining about the drinking water. It looks like drinking water is the main concern here and it was one of the demands in the villages and this problem was raised during protests as well. My understanding is that EBRD has done due diligence on the impact. Why then there is an issue with the drinking water, still?

AC: There shouldn’t be an issue with the drinking water.

RS: There shouldn’t be but apparently there are issues

AC: For instance, there are monitoring results for water discharge from the mining site available to the public, I believe. So there is published information and issues related to diarrhea or hepatitis, that would not be associated with the mine per say.

RS: The same concern was highlighted by Bankwatch. CEE Bankwatch did an investigation of the mine in 2011 and they were trying to get hydrogeologist Robert Moran into the Kumtor premises but Centerra Gold refused to grant access to Mr. Moran for water quality testing. So he took samples of the water down the local river stream from the mining project and said that “something is in this water that has been added from the mining activity”. It’s well documented investigation available on CEE Bankwatch website.

AC: Well, you can also go to the website of the company (Centerra Gold) and look at the data published by the company as well. Lots more data there.

RS: Why there are protests against the mine then? People are complaining about the drinking water.

DP: We followed up on that and 50 samples of water were taken near the Kumtor mine. None of these 50 samples confirmed Mr. Moran’s findings.

RS: Who took the samples?

DP: Independent consultants…

RS: Are you referring to Prizma LLC which was hired by Centerra Gold?

DP: No, I was not referring to Prizma

AC to DP: Prizma LLC is Centerra’s

DP: No, Prizma LLC is Mehrdad Nazari.

RS: But who was the consultant? When was the sampling done?

DP: ERM firm was the consultant. I don’t have all the data in front of me and ERM work never confirmed Moran’s findings.

RS: Did you go to the local communities? Have you talked to the members of the local villages?

DP: Yes, we did.

RS; and then what happened?

DP: Well, I am telling you that these findings were ungrounded.

RS: Ungrounded?!

DP: These findings were never confirmed and were unfounded.

RS: So you are saying that the local population complaints about drinking water quality were unfounded?

DP: What I am saying is that something that Mr. Moran took for sampling was never confirmed by the independent consultant.

RS: But what the local people were saying?

AC: We are basing and we took that science in terms of results, you raised that issue. And we’ve got an information that doesn’t confirm Mr. Moran’s findings. So, we are not trying to discredit it and we have body of data that actually says that water is ok for water supply. We can’t comment on why people are protesting.

RS: That’s one of the main demands. That’s why people are protesting.

AC: Last time, there was an annual meeting few years ago and issues of Centerra Gold came up. We took claims that were made by Bankwatch and others. We took it very seriously and dispatched two-three people to the mine site to have independent audits done. These claims were not found to be there as you quote there. It says that generally, company’s practice was in compliance with international best practice and policy. And also, according to requirements that we put onto the project as part of EBRD financing.

RS: Don’t you think there is a mismatch here between reports that you have with what others claimed?

AC: That may well be. That’s not uncommon.

RS: Well, that’s causing a problem, obviously. People have been protesting and then the same people were tortured after that.

MB: These are not the same things, I think. Torture is one thing but people complaining about the water is another. We’ve got two different issues. One is the government that behaves against the people who protest and that’s the rule of law and human rights issue. The second one is validity of data and why people are complaining. To me these are slightly different things. people could complain about many things, I’m not trying to discredit it. Maybe it could be the water or it could be some other things. We don’t know that. First thing is that you need to find out what the data is and then talk to these people. They maybe are saying it’s water but it could be something else.We need to validate.

AC: Put it this way. We always say we triangulate. So when we have information from colleagues like yourself, we’ll look at that data, we’ll look at that information and we would triangulate. We can’t really do much more to stage until we see body of evidence. But what I would counsel is that you can give us as much specific information that would help us to triangulate.

RS: I will and the thing is that as I mentioned, I was recently in Mongolia and we have similar reports from the local people near the Gatsuurt mining project about the drinking water again. What are the odds of having complaints from the local communities in both Kyrgyzstan and Mongolia about the drinking water?

AC to DP: Centerra in Mongolia, that’s not the project yet.

MB: That’s not the project yet.

RS: Centerra had Boroo mine which is out. And Canadians are planning to launch Gatsuurt project.

MB: That I don’t know.

DP: We have heard about this.

MB: I’m not a scientist around here. I’m anthropologist. I think people can express concerns and it may not be, it can also be about perceptions. I think we have to understand what these concerns are. As we know, we have worked on projects where the data is within whatever acceptable limits and people still don’t accept it as safe. I’m just saying that we have to understand exactly what the issue is. Have they’ve got a proof of them being sick or they don’t like the smell of the water. It could be million of reasons, well not a million but could be a lot of reasons, in our experience. And maybe it looks cloudy and that’s fine. I’m being very simplistic here. Why water could be not tributable it may be something else.

RS: Which is why I have a next question. Was there any comprehensive medical research into long-term health effects in the areas which have generated numerous complaints about the drinking water?

AC: In Kyrgyzstan there was.

RS: There was?!

AC: There was a medical study in 1998 after spill

RS; It was in 1998, now we are in 2015.

AC: Yes.

RS: Was there any study done in recent years?

AC: I don’t know about now. But there was a study of the impact of that spill and we were dealing with cyanide with half life of days which got down quickly to a low concentrations. Company provided clean drinking water. There have been number of claims about injuries and medical conditions associated with that and I understand that the medical reports from the Kyrgyz Republic that most of those reports were not associated with the spill.

RS: Country’s corruption record is next to Russia’s, according to Transparency International. Having said that it’s difficult to assess the Kyrgyz government’s data due to validity of the official reports on Kumtor which are part of the ongoing subject of the conflict of political interests. So the local communities are trying to defend their own rights at this point. And one of the issues is a drinking water. What I’m trying to find out is that was there an independent medical research into health related concerns in the areas of impact to have an understanding of what’s going on in the villages?

AC: Well, not as far as we are aware of. You are actually the first who told us about the protests. We don’t know. We need to triangulate.

DP: What we monitor is actually, in compliance with the standards of the project we finance and we have our own annual visits to the company. we review all the standards at least on annual basis. So we are happy that company is meeting standards. we didn’t launch any health assessment of the local populace.

RS: That’s my next question, you referred to the independent consultants hired by Centerra Gold.

DP: Paid by Centerra Gold but hired in agreement with EBRD in terms and references preferred by the bank.

RS: Then, Prizma LLC. is one of them?

DP: Yes

RS: That’s the question here. Prizma LLC went as far as stating that Kumtor mine glaciers are melting primarily due to the climate change. And I have contacted PhD William Colgan glaciologist and researcher with Geological Survey of Greenland and Denmark (GEUS) to clarify Prizma’s claim on effect of the global warming on Kumtor glaciers and according to Colgan’s expertise, climate change is not the primary reason, although it is undeniable that climate change is effecting glaciers globally, for Kumtor glaciers melting. Kumtor case is very specific, he says “local mining activities are clearly a larger factor in the recent wastage of the Lysyi and Davydov glaciers than regional climate change”. William Colgan’s finding was also demonstrated on satellite imagery pulled from archives from 1977 to 2014.

AC: In Tajikistan with one our existing hydro projects, we have looked into the subject of how to deal with the much-bigger hydraulic load that is coming because of the glacial melt. So, if you look at the number of glaciers around the world and see how many are retreating, the vas majority are indeed retreating.

RS: No doubt that global warming is causing a retrieval of glaciers around the globe. But Prizma LLC. in Kumtor case said that climate change is specifically to blame for melting Kumtor glaciers. And I’m quoting a researcher from one of the top institutions in the world on the effect of the global warming.

AC: Prizma was looking at very specific issues. We have been consulted by other experts on that. Indeed, we have our own experts in climate change team, many geologists. So this issue of melting is of concern and for instance, Centerra Gold had a habit of putting waste rock on one of the glaciers at Kumtor and EBRD has stopped such practice. We did that. That practice will cease.

RS: Then, if Centerra is still hiring as you said independent consultants such as Prizma

DP: Is not only Prizma

RS: but they did hire the company, as I know Prizma is one of the contractors which was hired to counter Bankwatch investigation in 2011 on mining impact. Obviously, we have an issue there if Centerra is hiring Prizma type of firms. We can’t count on the reports made by Prizma because they say one thing and the professionals are having the opposite opinion on the Kumtor subject. We seem have a discrepancy there, already.

AC: it’s a discrepancy but quite on off and on technical issues. We might have separate opinions. Now, what’s the consequence of saying that glaciers are melting. is it due to mining activity? Maybe glaciers are retreating with nothing to do with mining, if you take rock off the ground and putting the waste rock on the glacier which is also slowly moving, I think that’s an argument to say that one effecting the other. But if there’s no rock placed on the glacier which still retreating, well, it’s not gonna be due to the mining activity. It will be due to long-term geological issue.

RS: Given the subject of melting, Centerra Gold in this years Technical report admitted that one of the major concerns at Kumtor is related to the Petrov lake which is above the toxic tailing pond. Melting is the reason for growing in size of the Petrov lake. And people have been raising the issue of outburst at Petrov lake which may wash away the cyanide tailing pond and contaminate the Kumtor river that is a tributary to Syr Darya river and the local water resources. You might probably heard of the dam spill disaster at Mount Polley mine in Canada, last year. Conditions are somewhat similar between the Kumtor and Mount Polley sites which both had over 50 million tones of waste chemical material. Is there any plan in place or research that would safeguard the area from disaster scenario similar to Mount Polley dam spill?

AC: Yes, there’s a research and they are putting in an engineering design. That aspect is monitored by the company, I think they have done land forming to channel any sudden breaks. So they have been engineering that issue out.

DP: And they have been assessing the worst case scenario., in terms of what would have really happened. The modeling showed that it’s even with the outburst falling into the tailing pond and the contamination would not be significant. They did modeling but they are not ignoring the issue but implementing measures to prevent it from happening.

RS: That’s concern here. Mount Polley dam spill disaster took place while there was a notion that it’s safe. As a result, local water resources near Mount Polley mine are contaminated. This is a disaster if you ask me

AC: Good thing about the project is that it’s very visible and we have had consultants all over that. We have extremely active civil society, it comes up every year on annual meetings. So it’s a project that is very much in the spotlight.

RS: Centerra Gold issues raised at EBRD on a yearly basis?

DP: Yes

RS: So you are updated on concerns over Kumtor mine every year?

DP: Yes.

RS: But you were unaware of the human rights violations related to Kumtor mine operations?

AC: No. That’s why we are interested in having more information on that from you.

RS: I have written number of reports on Kumtor mine subject and I’ll share these reports with you.

AC: That’d be great.