Protests Halt Work at Mongolian Gold Mine

Protests Halt Work at Mongolian Gold Mine

By the Associated Press

June 15, 2006

ULAN BATOR, Mongolia (AP) -- Canadian mining company Centerra Gold Inc. said Thursday it has temporarily halted work at its Boroo gold mine in Mongolia amid protests over the government's dealings with the company.

''We shut down all our production work because of threats from protesters,'' Paul A. Korpi, president of Centerra subsidiary Boroo Gold Co., told reporters in the Mongolian capital, Ulan Bator on Thursday.

About 800 people demonstrated Wednesday in downtown Ulan Bator over Mongolia's mining policies, which offer generous incentives to foreign mining companies such as Centerra. Critics accuse the government of giving away too much of the country's abundant mineral wealth.

After the rally, about 150 protesters boarded buses and cars to travel to the mine site, about 90 miles from Ulan Bator. Protest leaders said they planned to camp in the mine to obstruct its operations and prevent workers from detonating explosives.

Korpi urged the government to take action to peacefully resolve the dispute.

''Centerra has a history of cooperative relations with the government of Mongolia and intends to work closely with police and governmental officials to ensure the prompt resumption of normal mine operations,'' the company said in a statement posted on its Web site.

Meanwhile, police were investigating the death of one protester who collapsed at the mine Wednesday evening, Korpi said.

''Our medical personnel tried to revive the person ... and then upon arrival at our medical facility the person died,'' he said without giving further details.

There have been no accusations of improprieties by Centerra. Like other foreign miners, though, it has become the focus of domestic political clashes over how to exploit the country's mineral resources.

Centerra is 53 percent owned by Canadian uranium producer Cameco Corp. and it owns a 95 percent stake in Boroo Gold. The company has signed an agreement with the Mongolian government that allows it to pay no taxes during the mine's first three years of operations and only 50 percent of the usual profit tax in the next three years. The mine began operations in March 2004.

The deal also shields Boroo from changes in laws such as a windfall profits tax, which were enacted amid similar protests last month.