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The Kumtor mine in Kyrgyzstan on May 31, 2011.

Vladimir Pirogov/Reuters

Canada’s Centerra Gold Inc. said on Sunday it has initiated binding arbitration against Kyrgyzstan government, after the parliament passed a law allowing the state to temporarily take over the country’s biggest industrial enterprise, the Kumtor gold mine operated by Centerra.

Recently, a Kyrgyzstan court also imposed a US$3.1-billion fine on Kumtor Gold Company (KGC), which operates the gold mine, after ruling that the firm had violated environmental laws.

The gold miner said that it intends to hold the government accountable in the arbitration for “any and all losses and damage” owing to its recent actions against KGC and the Kumtor mine if no resolution is reached.

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“The Government’s actions have left Centerra no choice but to exercise our legal rights, through the pursuit of arbitration and otherwise, to protect the interests of KGC, Centerra and our shareholders,” Centerra’s chief executive officer Scott Perry said in a press release.

Kyrgyzstan has a long history of disputes with Centerra Gold over how to share profits from the former Soviet republic’s biggest industrial enterprise.

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