Reports of deaths following cyanide spill discredited

The 1997 startup of the Kumtor gold mine in Kyrgyzstan was perceived as the cornerstone of Cameco’s (CCO-T) strategy to grow through diversification and the model of a more-than-fair partnership between a Canadian mining company and a foreign nation.

But following dubious reports of deaths from a recent cyanide spill at Kumtor, some shareholders began to worry that communist forces in the former Soviet republic were waging a propoganda war to discredit Cameco, which operates the huge mining complex. Adding fuel to this speculation was the collapse of several joint ventures in neighboring Kazakstan involving Canadian companies, which precipitated a number of ongoing legal battles for compensation for investments in mineral projects derailed by onerous and arbitrary government demands.

“To my knowledge, there is no comparison with what happened in Kazakstan,” says Elaine Kergoat, public affairs manager at Cameco. “The [Krygyz] government supports foreign investment and is on the road to building a market economy. But it is just like any other government; it has factions who support the project and some who don’t, and those who don’t get the most ink.”

Kumtor is the largest Western-managed mining project in Central Asia. It is owned two-thirds by Kyrgyzstan and one-third by Cameco, but is operated by a wholly owned subsidiary of Cameco Gold. Capital costs for the mine rang in at US$450 million, much of which was raised by Cameco on behalf of its joint-venture partner.

Commercial production at the high-altitude operation began last spring.

Total production in 1997 was more than 500,000 oz. gold at cash costs below US$200 per oz. The mine made a solid contribution to Cameco’s bottom line in 1997, accounting for 16% of total revenue and 9% of earnings from operations.

At last report, reserves at Kumtor stood at 75.7 million tonnes grading 3.54 grams gold per tonne (8.6 million contained ounces), plus an additional resource of 32.4 million tonnes of 3.75 grams (3.9 million contained ounces).

Cameco’s role as operator of Kumtor came under scrutiny on May 20, when a truck en route to the rugged and remote mine site overturned at the approach to a bridge over the Barskoon River. Three containers ruptured, spilling about 1.8 tonnes of sodium cyanide into the fast-flowing river.

Almost a week later, news reports stated that a man and a woman had died as a result of the spill, and hundreds of other people had been hospitalized.

Cameco disputed the report, noting that the effects of cyanide poisoning appear within minutes of exposure, not after several days.

Kergoat says the government has since confirmed that the man died from cancer, wheras the woman had a pre-existing heart and lung disease that may (or may not) have been exacerbated by exposure to cyanide. The company was not provided with any autopsy reports.

Kergoat points out that the media reports, even if false, were probably generated in good faith by people who believed the stories to be true, rather than forces out to discredit the company for political gain.

“We had a panic situation evolving in a poor community that was being asked to trust [company and government] officials,” she says. “[They] now have the collaboration of independent experts and the World Health Organization (WHO).”

These experts say it is unlikely that as many as 2,000 or more patients experienced cyanide intoxication — as some reports had asserted — “due to the absence of possibilities of relevant exposure after the first few days.” In a WHO report, government officials were told that cyanide occurs naturally (most notably in certain roots, fruits and vegetables), and that as long as the level of exposure is not extreme, the human body can quickly recover.

“Only when there is massive exposure, a serious and potentially life-threatening situation occurs,” the report states. “Without such a high concentration in the body, symptoms are minor, if any, and will resolve quickly in the absence of exposure.”

The experts also note that, with the passage of time, relevant exposure to a cyanide spill becomes less and less probable for a number of reasons, one being that cyanide decomposes rapidly or combines with metals to form stable compounds.

“This does not, of course, rule out that people have smelled the typical odor or have had dermal (skin) contact with cyanide some days after the accident,” the report continues. “It should, however, be clear that no serious diseases could have resulted from that exposure.”

Local residents were told that animal products from local farms and fish from the nearby lake are safe, as cyanide does not build up in animals (including fish), and that no genetic, reproductive or cancer-related aftereffects are to be expected.

Meanwhile, Kumtor manager Gerhard Glattes resigned after barely a year at his post.