On April 4, Kyrgyzstan’s President Sadyr Japarov announced that the government reached an agreement with Canada-based company Centerra Gold, ending a prolonged legal dispute. Under the agreement, Kyrgyzstan’s government gained 100 percent ownership over the Kumtor gold mine and its operating companies, in addition to a $36.6 million cash payment. Previously, Centerra fully controlled the gold mine through its subsidiary Kumtor Gold Company (KGC). In return, Kyrgyzaltyn, a state-owned mining company that processes gold from Kumtor, will relinquish its 26 percent stake in Centerra. The deal is subject to the cancellation of all legal proceedings in all jurisdictions without admission of liability. Kyrgyzstan’s parliament and cabinet have already approved the agreement to end the dispute. The agreement is subject to Centerra’s stakeholders' approval, but this is not expected to be a major hurdle.

Gold mining is important to Kyrgyzstan’s economy, accounting for 23 percent of total industrial production and 12 percent of its GDP. The Kumtor open-pit mine began producing gold in 1997 and currently produces an average of 17 tons per year. With around 4,000 employees, the KGC is the country’s largest industrial company.

The European Bank for Reconstruction and Development and the UN Deputy Secretary General issued public statements supporting the agreement. The EBRD, which has been concerned about the effect the dispute over Kumtor could have on foreign investors, called the agreement “a significant and positive step and urges the parties to fulfill all conditions of the agreement in a full and timely manner so that the matter can be considered resolved and closed.” The Kyrgyz government has expressed its commitment to sustainable production patterns and environmental conservation.

Reaching a consensus was a challenging task for all parties involved. For years, Kumtor has been the subject of financial, legal, and environmental disputes. Initially, Centerra was accused of conducting activities that were harmful to the environment. Kyrgyzstan's regulatory authorities filed four claims against KGC in 2019 alleging environmental harm to water and land resources at the gold mine. The company was also accused of tax evasion and worker rights violations. In February 2021, the government appointed a panel to investigate the enterprise, and the Revenue Agency determined that Centerra owed more than $170 million in unpaid taxes. However, the Toronto-based mining company denied all allegations.

Relations further deteriorated in May 2021, when lawmakers in Kyrgyzstan concluded that KGC operations harmed the environment and local populations, and consequently authorizing the government temporarily to seize control of the mine. A Kyrgyzstan Court also fined KGC $3.1 billion after determining that the company violated environmental regulations by dumping waste rocks on glaciers. Shortly thereafter, the Canadian company filed a retaliatory arbitration claim against the government of Kyrgyzstan for taking control of the mine.

The Kyrgyz government expects that the April 2022 resolution will improve Kyrgyzstan's attractiveness to businesses and investors. Although the mine will stay under state ownership, the president stated that the dispute was not caused by a desire to nationalize the operation.

Under the agreement, the government and state-owned Kyrgyzaltyn JSC assume full ownership of the mine within 90 days after signing the agreement, including all restoration and reclamation responsibilities. However, Kyrgyzstan might face challenges exporting gold products from Kumtor, which will now be controlled by Kyrgyzaltyn. In September 2021, Kyrgyzaltyn was suspended from the London Bullion Market Association’s Good Delivery List, which sets the standard for gold and silver bars worldwide. The move was due to StoneX, a financial services firm, alleging the Kyrgyz refiner of delivery failure of half a metric ton of gold bars, and attempts to divert around $29 million owed to Centerra Gold for the bars. The suspension of accreditation impedes Kyrgyzaltyn's participation in mainstream markets, particularly major gold hubs like Switzerland and New York, because most institutions that dominate precious metals trade exclusively accept gold from refineries on the Good Delivery List. Bishkek, therefore, needs to concentrate on the readmission of the state refinery; otherwise, Kyrgyzstan will be compelled to sell gold at discounted prices to limited destinations, such as China, India, and the Middle East.

According to Japarov, until now, Kumtor contributed symbolic yearly profits to the national budget. In his speech, he commented: “Over 20 years we have received a total of only about $85 million. In contrast, in just seven months last year made a profit of $323 million from the mine.” The president added that Kyrgyzstan hopes to make $500 million this year and estimated that the mine will yield at least $5 billion over the following ten years. While it appears that the battle for the Kumtor Gold Mine is over, and state ownership of the mine is projected to strengthen the economy of the Central Asian country, the issue with Centerra could still deter other potential foreign investors. As the EBRD noted, living fully up to the terms of the settlement agreement will be essential.