NGOs have issued a joint statement on the plan to expand the gold mine in Armenia’s Karaberd
The “Arnika” and “NESEHNUTI” NGOs of the Czech Republic have issued a joint statement Friday on the plan to expand the gold mine in Karaberd town of Armenia. The statement treads as follows:
With this joint statement by the two organizations Arnika and NESEHNUTÍ, we respond to the latest developments in the Karaberd settlement in the Lori region of Armenia, where public hearings on the plan to expand the gold mining operations in Karaberd are being held on 04.11.2022.
In view of the circumstances mentioned below, we hereby express our opposition to the plan to expand the gold deposit in Karaberd settlement. Thus, by making a joint statement, we appeal to the Armenian public, the local authorities of the Pambak community, the regional government of the Lori region to prevent the plan to expand mining and express a negative opinion. We also call on the Ministry of Environment of the Republic of Armenia and the Ministry of Territorial Administration and Infrastructure of the Republic of Armenia to conduct a proper inspection of the project in the future.
Arnika and NESEHNUTÍ are Czech NGOs that have long been addressing environmental and social issues in the Czech Republic and abroad. NESEHNUTÍ and Arnika’s goal is to protect nature and a healthy environment for future generations at home and around the world. Arnika has long advocated for less waste and hazardous substances, living rivers and diverse nature, and the right of citizens to make decisions about the environment. For a quarter of a century, NESEHNUTÍ has been promoting participation of locals in decision-making and civic campaigns not only in the Czech Republic, but also in the South Caucasus and Southern Ukraine.
In 2018, Daniel Vondrouš, the then director of the Green Circle network of environmental organizations, attended a CivicBarcamp organized by NESEHNUTÍ in nearby Vanadzor, where he highlighted the impacts of gold mining and shared his experiences with the introduction of a ban on the use of cyanide in gold leaching in the Czech Republic. Now he is working as an advisor of the Ministry of the Environment of the Czech republic.
Gold mining can never be environmentally friendly and we therefore want to draw attention and appeal to local residents to be wary of the promises and decide together on the future of their community.
Mineral extraction has widespread adverse impacts on the environment and the health of mine and ore processing company employees, as well as residents who live near these operations. Neglect of the necessary technological procedures, breach of waste management regulations and inadequate technical security can reduce the quality of life of residents and damage the surrounding countryside in the long term and irreversibly.
The risks of mining include dust emissions, noise, potential accidents and chemical spills into local streams and soil or lowering of groundwater levels. Spills of chemicals used in mining and ore processing and metals in the ore itself  adversely affect human health. Data collected through pollution monitoring of mining communities in the Tumanyan and Stepanavan regions of Lori province, conducted between 2018 and 2021, confirmed these concerns. The results of Arnika’s study highlight the presence of pollutants in the environment and the higher health burden on the population of communities in the region affected by mining compared to the population not exposed to these impacts.
NESEHNUTI’s work has reaffirmed the interest of Armenian communities in transitioning to sustainable development and greater participation in environmental decision-making.
The above arguments highlight the risks faced by local communities and nature, which is why we call for the prevention of the expansion of the Karaberd gold mine, AM News writes.
Armenian government has extended mining rights to Lydian Armenia CJSC
The Armenian government has extended mining rights to Lydian Armenia CJSC at the controversial Amulsar gold mine site for another three years, until 2039, without a new environmental impact assessment.
June 2022 amendments to Armenia’s mining legislation allow companies to mine with environmental impact assessments more than a year old, if work delays were caused by force majeure reasons, including “civil disobedience.”
Initial environmental impact assessments (EIA) finding in favor of the mine were thrown out after allegations that Lydian had a hand in manipulating their conclusions.
Armenian PM Nikol Pashinyan, facing mounting pressure at home opposing the mine, ordered a new audit conducted by the Lebanese firm ELARD.
In August 2019, the report found that environmental risks at Amulsar “would be manageable.” Pashinyan, pointing to the positive findings, said the Amulsar mine should be opened.
A public backlash forced the government to stand down and promise that it would order yet another EIA. The 2020 Artsakh war pushed the issue to the backburner and no new EIA was ever conducted. The June 2022 amendment also lists “war” as an acceptable force majeure reason for any delay.
Lydian Armenia can thus go ahead with the project based on the August 2019 ELARD report.
The Pashinyan administration, which originally opposed mining at Amulsar now supports it, pointing to the country’s post-war economic needs.
Lydian Armenia is a 100% subsidiary of Lydian Canada Ventures owned by the US firm, Orion Mine Finance and Canadian firm, Osisko Gold Royalties, who both invest in mining and mineral sectors, HETQ writes.
Armenia’s journey towards responsible mining
Mining raises many issues for communities. What minerals are being developed? Where are the mines? Who owns these mines? What kinds of ore are produced? In what form and to which countries are they exported? Armenia’s accession to the Extractive Industries Transparency Initiative (EITI) helped bring the answer to these kinds of questions and more public and transparent, the World Bank said in an article entitled “Armenia’s Journey Towards Responsible Mining”.
As in many countries, mining can be a sensitive topic in Armenia, the article says. It notes that civil society follows mining developments closely to demand better protection of the environment.
The World Bank says that the Armenian government hoped to improve the management of natural resources by making it more transparent, accountable, and participatory. It grew interested in the EITI and, in 2015, announced its intention to join. “Within a year, Armenia met all the preconditions for joining the EITI, and its membership application was approved in 2017”, it says.
The WB says that the country’s legislation did not ensure full transparency and accountability from the sector. The National Assembly made legislative changes to require the publication of large amounts of financial information, such as tax payment data by companies as well as data on extraction and exports, charitable activities, and socio-economic support projects in communities — reporting this information annually became legally required. This information is reflected in the EITI annual national reports.
According to the article, in 2019, Armenia took on responsibilities beyond the scope of mandatory requirements, which ensured even greater transparency.
“Armenia made remarkable achievements in its implementation of the Standard. At the 2019 EITI Global Conference in Paris, Armenia received the EITI Chair’s Award for implementing the Standard in an innovative and resolute manner, as well as for effective multi-stakeholder governance”, the article says.
“I have personally followed the process with great interest. Armenia has achieved remarkable progress. Out of the 54 countries, Armenia is among the nine that have received the highest possible assessment, and it has only been three and a half years since Armenia began implementing the EITI; in that regard, its accomplishments are really commendable”, Mark Robinson – Director of the EITI International Secretariat, said.
For civil society representatives and journalists, the new requirement to disclose the beneficial owners of metal extracting companies was a unique opportunity, the WB said. In Armenia, it had often been quite difficult to obtain information regarding beneficial ownership, it added.
“Armenia`s success story is ongoing and there is still more that can be done. Future reforms are going to be geared at mitigating environmental impact. The Government is continuing to develop a strategy for the sector by engaging all interested parties”, Armenpress writes.
Armenia’s environmental crimes committed in Azerbaijani lands are said to cause $285 billion in damages
Azerbaijan’s President Ilham Aliyev vowed to start legal proceedings at international courts to demand compensation for the damage and ecological terror committed by Armenians in the once occupied Azerbaijani territories.
The announcement was made at a video meeting with the newly appointed special representative of the Azerbaijani president in the Zangilan district.
The president outlined deforestation, illegal exploitation of gold reserves, and contamination of rivers as one of the ultimate examples of the environmental terror conducted by Armenians.
“Fifty to sixty thousand hectares of forest have been completely destroyed. We observed this via satellite. A process of deliberate deforestation was underway, especially in Kalbajar, Lachin, Zangilan and Gubadli districts. This, in fact, is savagery and looting,” President Aliyev was quoted as saying by his official website.
According to him, the world’s second-largest sycamore forest in Zangilan suffered seriously from deliberate deforestation and arson, which were also observed in the Kalbajar and Lachin districts even after the war in 2020. Moreover, the Okhchu River and the Vejnali gold deposit in Zangilan were also subjected to large-scale ecological terror and illegal exploitation.
“The illegal exploitation of the Vejnali gold deposit by foreigners, including foreigners of Armenian origin, will cost them dearly. We know the names of those people. We will expose them to the world and they will compensate us. They will definitely pay compensation for the damage,” President Aliyev said.
“We have now started all the legal procedures … Not a single crime will go unanswered. First, we are calculating all the damage, the process of passportization of all our cities and villages is underway. Video and photos of each building or the ruins of that building are being taken. This is proof, and we intend to appeal to international courts. Preparations are underway.”
According to the preliminary estimates, the amount of material damage caused by Armenians to Azerbaijan’s infrastructure, resources, and citizens totals $818 billion. The environmental crimes caused $285 billion in damages.
The Azerbaijani authorities have repeatedly voiced the unprecedented systematic deforestation activities in the Karabakh region, calling for an international investigation into the issue.
Meanwhile, five gold deposits and other natural resources of Azerbaijan in the once occupied territories have been intensively looted by the local Armenian companies and those invited from overseas. Companies such as Vallex Group, First Dynasty Mines, Base Metals, Lydian International, GeoProMining, Vedanta Group, and the Armenian-descent businessmen and entrepreneurs had been involved in illegal mining operations in the Azerbaijani lands. The Franck Muller luxury watch manufacturer company owned by a Swiss tycoon of Armenian origin, Vartan Sirmakes, used gold from the Soyudlu and the Vejnali deposits of Azerbaijan in the production of Frank Muller watches. Sirmakes has reportedly exploited gold worth $302 million.
The contamination of the Okhchu river, one of the eleven rivers of Azerbaijan in the Karabakh region, which is home to more than 30 percent of the country’s overall drinking water reserves, has also been a great concern for the Azerbaijani authorities over the years.
Baku blamed the Armenian authorities for not preventing the pollution of the river, the water of which is not used in Armenia and flows into Azerbaijan’s agriculturally important Araz River. The Okhchu river is said to be used as a “collector” by Armenia’s producers for sending away the industrial wastes from the country’s territory and causing agricultural, environmental, and humanitarian disasters in Azerbaijan. The analysis of the samples taken from the Okhchu river revealed many life-threatening elements in the water, including copper, molybdenum, manganese, iron, zinc, and chromium. According to the examination results, the amount of nickel in the river was seven times, iron four times, and copper-molybdenum two times higher than normal, Caspian News writes.
GeoProMining Gold indirectly confirms its involvement in corrupt deal with Armenian government
The GeoProMining Gold LLC, which lost the vast majority of Armenia’s Sotk gold mine after the capitulation signed by Nikol Pashinyan, “has forgotten” about the losses incurred after its main shareholder Roman Trotsenko cut a “corrupt political deal” with the Armenian government, Pastinfo reports.
As a result of the trilateral statement of November 9, 2020, a part of the Sotk mine fell under the control of Azerbaijan. In particular, Anglo Asian Mining PLC, a UK-based holding company, has stated that more than 75% of the mine is under the control of the Azerbaijani military and GeoProMining Gold does not carry out any activity in Sotk.
Experts say that GeoProMining has all the legal grounds to apply to the International Court of Arbitration, as it has suffered significant material damage as a result of the actions of the Armenian government. Speaking to Sputnik Armenia, Sargis Grigoryan, head of the GPartners Law Firm, did not rule out the possibility that investors could file huge compensation claims against Armenia in international courts as part of international agreements. Moreover, the amount of possible compensation demanded, according to him, may range from $3 billion to $5 billion, which will be paid at the expense of Armenian taxpayers.
And suddenly a redistribution of business took place. Under highly suspicious circumstances, most of the shares of the Zangezur Copper-Molybdenum Combine (ZCMC) were sold to Roman Trotsenko without the knowledge and consent of the other GeoProMining Gold shareholders, which seemingly overshadowed the damage caused by the loss of the Sotk mine.
On March 16, Pastinfo submitted a written inquiry to GeoProMining Gold Director Roman Khudoli over violations of the company’s rights due to the capitulation deal, damages suffered, and Sotk mine operation, however the company has nothing to say as a result of suspicious transactions related to ZCMC.
In particular, Pastinfo asked the company whether the interests and rights of GeoProMining Gold have been violated as a result of the implementation of the provisions enshrined in the November 9 statement of the Armenian and Azerbaijani leaders, and the scale of the material losses it suffered. The news website also sought to reveal the official reason why the company did not make a claim to the relevant international financial institutions or the International Court of Arbitration against Armenia to get compensation, especially when, according to experts, the company had quite high chances to win the lawsuit. It also asked whether any issues related to the impossibility of operating the Sotk mine, compensation for damages, personnel maintenance and security provision while developing the mine had been discussed with the Armenian authorities in writing or verbally.
Pastinfo also tried to find out the reason for the “generosity” of the company that suffered great losses towards the Armenian government. The company was deprived of the opportunity to exploit 75% of the Sotk gold mine reserves, and, accordingly, the expected profits, but in parallel with the deal in September 2021, GeoProMining Gold announced that it would not cut jobs and after the ZCMC deal signed on September 30, it donated a large part of the newly acquired shares to the Armenian government.
“In addition, we reminded the company that the Azerbaijani leadership, who had been announcing plans to sue GeoProMining Gold over the Sotk mine development and waring about the environmental risks caused by the Zangezur Copper and Molybdenum Combine, stopped making such statements after the Industrial Company, a GeoProMining Armenia subsidiary, acquired a stake of ZCMC. We tried to find out what they attribute it to and whether any efforts have been made to normalize relations with Azerbaijan,” the news site said.
“Dragging its feet, the GeoProMining Gold LLC has avoided answering the mentioned questions, thus indirectly confirming our suspicions about the shady arrangements and a corrupt deal with the current Armenian authorities,” Pastinfo stressed.
It is worth noting that Russia’s former Minister of Health and Social Development Mikhail Zurabov, who owns 12.5% of the ZCMC shares, filed a lawsuit to a court in Syunik in August 2021, asking for a preference to acquire the ZCMC shares. The court not only agreed to hear the lawsuit but also applied a measure, seizing 75% of the shares of the Zangezur Copper Molybdenum Combine.
Later on September 30, the Syunik Court of General Jurisdiction ruled to lift the ban on shares, and the GeoProMining Armenia subsidiary acquired them immediately after it. After the deal, Trotsenko granted 15 percent of the shares of the Molybdenum Combine to the Armenian government, Panorama reports.
GeoProMining Gold LLC intends to operate Armenia’s Sotk gold mine until 2025
GeoProMining Gold LLC intends to operate Armenia’s Sotk gold mine until 2025 via the open-pit method, after which it will revert to closed-pit mining.
GeoProMining Gold LLC, which runs the mine, is wholly owned by Cyprus-registered GeoProMining that is majority owned by Russian billionaire businessman Roman Trotsensko.
The company has submitted a draft environmental safety assessment to Armenia’s Ministry of Environment to this end.
Sotk is the largest gold mine in Armenia and now employs about 870 people, most of whom (98.2%) are from the Armenia’s Gegarkunik Province. The mine employed double this number before last year’s Karabakh war.
As a result of the war, and the redrawing of the Armenian-Azerbaijani border, a portion of the mine came under the control of Azerbaijan.
In November 2020, Deputy Chief of the General Staff of the Armenian Armed Forces Tiran Khachatryan said that half of the mine was in Armenia and the other half in Azerbaijan.
The company, which has been granted an open-pit mining permit until 2023, doesn’t specify how long it will continue closed-pit mining.
The capacity of the Sotk open pit mine is currently 1 million tons per year. This project envisages increasing the productivity of the open pit mine to 1.75 million tons per year, and then proceeding to the underground processing, the capacity of which will make 400,000 tons annually.
It’s unclear why the company will revert to closed-pit mining at Sotk. Some speculate that it may be for security concerns.
As productivity will decrease because of closed-pit mining, the company says it will carry out exploration work in parallel with extraction.
GeoProMining also operates the Agarak Copper-Molybdenum Combine some eight kilometers from the town of Meghri in southern Armenia.
Last year, a small-scale “battle” took place in a picturesque stretch of mountains in Armenia’s Vayots Dzor region
The Armenian government is caught between a rock and a hard place as it tries to mediate between environmental activists and an international mining company.
Last year, a small-scale “battle” took place in a picturesque stretch of mountains in Armenia’s Vayots Dzor region.
For years, Lydian Armenia, a subsidiary of Jersey-registered mining company Lydian International, had been trying to set up a gold mining operation at Amulsar in the south of the country, much to the chagrin of locals and environmentalists.
Following Armenia’s so-called Velvet Revolution of 2018, which swept a reformist government, led by Nikol Pashinyan, into office, protesters had felt emboldened and subsequently blockaded the site, setting up mobile homes on the road to prevent any heavy machinery from passing through.
Last year, Lydian Armenia hired a private security company to begin removing the mobile homes. This led to fistfights and clashes between protesters and private security forces, requiring the intervention of the police. Dozens were arrested.
Now, more than a year on from this “battle”, the dispute continues, with little hope of a resolution in sight.
Lydian Armenia first discovered the gold deposits in Amulsar in 2005. In 2012, the company signed an agreement with the Armenian government – then led by the controversial Serzh Sargsyan – to begin exploiting the resource. According to some estimates, the company has already invested 400 million US dollars into the project, despite not even starting actual mining operations.
According to Armenia’s Ministry of Economy, the mine, when fully operational, can raise Armenia’s GDP by up to 1.14 per cent in just its first year.
However, plans for the mine have from the start been met with opposition from environmentalists. Their main concern revolves around the potential use of cyanide in gold mining. According to chemist Oksana Kharchenko, cyanide is widely used in gold mining operations around the world because of how easily it combines with metals.
“Cyanide is used to leach gold from ore,” she says. “This means that by applying a cyanide solution over a pile of ore, miners can extract just the gold. Of course, because cyanide is poisonous, if large quantities find their way into water sources, for example, this could cause major negative effects to people’s health.
Located in the Arpa and Vorotan river valleys, ecologists say that the Amulsar mine carries a major risk of pollution. This in turn would have a major impact on the ecosystem of Armenia’s iconic Lake Sevan.
Amulsar is not the first time that the use of cyanide in gold mining has stirred controversy in Central and Eastern Europe.
In Romania, a decades-long dispute between environmentalists and a mining company, Gabriel Resources, which wanted to mine gold in the ancient Roman mining town of Roșia Montană, was only resolved in 2020 when Romania applied to UNESCO to protect Roșia Montană as a World Heritage Site. (Roșia Montană was added to UNESCO’s list in July of this year).
Much of the opposition to mining at Roșia Montană stemmed from a large cyanide leak which occurred at an Australian-owned gold mine in northwestern Romania in 2000. Over one million cubic metres of cyanide-contaminated waste spilled into the Tisza and Danube rivers, killing fish and poisoning water supplies for hundreds of kilometres downstream, even affecting neighbouring countries Hungary and Serbia.
Earlier this year, Kyrgyzstan was also in the headlines for its attempts to nationalise the Kumtor gold mine, the largest in the country, for persistent reports of environmental violations by the mine’s Canadian owners. The most serious was in 1998, when a truck carrying two tonnes of sodium cyanide crashed into the Barskoon river, dumping its load into the water. Around 2,000 people were hospitalised in the aftermath.
Green light, red light
In Armenia, one of Pashinyan’s first acts as prime minister was to commission Lebanese company ELARD to investigate the potential negative impact of the Amulsar mine. A report was produced concluding that there were significant areas where Lydian’s environmental protection measures fell short, but that the possible impact on nearby water sources – including Lake Sevan – was nil.
Pashinyan put a positive spin on the report and used it to give the project the green light. However, following protests and much opposition from Armenian civil society, who claimed that the report in fact made it clear that the mine would cause environmental damage, he changed his mind just two weeks later, saying that his government would continue to study whether the mine would in fact be safe for the environment.
Back to square one, the standoff continued.
The Armenian government now finds itself in a difficult position. It is reluctant to ignore the very persistent demands of the protesters, particularly as his government portrays itself as more open, democratic and consensus-based than its predecessors.
However, at the same time, acquiescing to the demands of the protesters could hurt investors’ confidence in Armenia.
The country already lacks foreign capital and can scarcely afford to scare away other potential investors. Furthermore, halting the project, after Lydian Armenia has already spent hundreds of millions of dollars, could open the door to the company taking legal action against the Armenian government and demanding compensation.
It will no doubt be aware that Gabriel Resources has filed a 4.4 billion US dollars arbitration claim against Romania for alleged investment treaty violations in relation to the Roșia Montană project.
Pashinyan and his government have been largely silent on the issue for the past two years, although last month Deputy Prime Minister Suren Papikyan did say that he was “inclined to operate the mine”.
He added, however, that “it’s rather difficult to say when the Amulsar gold mine will be opened”.
Russian company has bought a majority stake in Armenia’s largest mining enterprise
Russian company has bought a majority stake in Armenia’s largest mining enterprise and immediately ceded part of it to the Armenian government.
The GeoProMining group and the government announced the deals in a joint statement issued on Friday more than two months after law-enforcement officers raided the offices of the Zangezur Copper-Molybdenum Combine (ZCMC) in a crackdown promised by Prime Minister Nikol Pashinyan.
The statement said a GeoProMining subsidiary acquired 60 percent of ZCMC on Thursday and then “granted” a quarter of that stake to the Armenian government.
“The granted 25 percent of the shares constitute 15 percent of the equity of ZCMC that will consequently belong to the Republic of Armenia,” it said.
“We intend to expand cooperation with the Government of Armenia,” the GeoProMining owner, Russian billionaire Roman Trotsenko, was quoted as saying.
The statement gave no clear reason for Trotsenko’s lavish donation to the government. Nor it did specify from whom the Russian company purchased the majority stake in ZCMC.
The Armenian mining giant employing some 4,000 people is based in Kajaran, a small town in southeastern Syunik province. A German metals group, Cronimet, officially owned 75 percent of its stock for many years. The rest of the company belonged to two obscure Armenian firms.
ZCMC’s ownership structure changed significantly but remained opaque after Cronimet reportedly sold its controlling stake in 2019. A former senior Russian government official, Mikhail Zurabov, became one of its new minority shareholders.
ZCMC was believed to be controlled until recently by a group of individuals at odds with Pashinyan’s government. One of them, former Syunik Governor Vahe Hakobyan, is a senior member of the main opposition Hayastan alliance led by former President Robert Kocharian.
Contacted by RFE/RL’s Armenian Service on Friday, Hakobyan refused to comment on the change of the company’s ownership.
Campaigning for the June 20 parliamentary elections, Pashinyan pledged to crack down on ZCMC’s “corrupt shareholders” and make sure that their shares are “returned to the people.” He accused the ZCMC management of banning workers from attending his campaign rally in Kajaran.
“The Zangezur Copper-Molybdenum Combine, you have crossed the red line, which means that this blue hammer will first smash your heads,” the prime minister declared during that rally. “Whatever you say, your fate is sealed, you just quietly wait for your verdict.”
In July, masked officers of Armenia’s National Security Service (NSS) repeatedly searched ZCMC’s offices and detained thee company executives. At least one of them remains under arrest.
Also arrested were the mayors of Kajaran and two other Syunik communities affiliated with Hayastan. They are facing different charges rejected by them and the opposition bloc as politically motivated.
Also in July, the Armenian parliament approved a government proposal to impose a new 15 percent tax on exports of copper and other metals. Government officials denied that the main purpose of the measure is to hurt ZCMC owners.
ZCMC has long been one of Armenia’s top three corporate taxpayers. The government collected 41.7 billion drams ($86 million) in various taxes from it last year.
GeoProMining already owned two other Armenian mining companies before the latest acquisition. One of them operates a massive gold mine located in eastern Gegharkunik province.
Armenia Zangezur Copper Molybdenum Combine co-owner: This is first step in broader investment vision
“Industrial Company” and the Government of Armenia (GOA) are happy to announce that the Company has granted Armenia and the GOA has accepted a 25% share of the Company, Armenian News-NEWS.am has learned from the Prime Minister’s Office.
“Industrial Company” holds 60% of the shares of the Zangezur Copper Molybdenum Combine (ZCMC). The granted 25% shares constitute 15% of the equity of ZCMC that will consequently belong to the Armenia.
“Industrial Company” is a fully owned subsidiary of “Georpromining Armenia.” The company has acquired 60% of ZCMC on 30 September 2021.
Roman Trotsenko, Geopromining Board of Directors Member, commented on the transaction. “Geopromining has been operating in Armenia for many years, and we have been a reliable partner for the Republic of Armenia and Armenians for almost 2 decades. We have gladly embraced the opportunity to further expand our business in Armenia and acquire majority share at ZCMC, while offering the Republic of Armenia 15% equity participation. We intend to expand cooperation with the Government of Armenia and this is the first step in a broader investment vision. The Republic of Armenia, the people and our shareholders will benefit from all this, as well as new opportunities will open up for the Armenian economy. We also have a goal to start the construction of a new copper smelter in Armenia in the coming years.” Suren Papikyan, Deputy Prime Minister of Armenia commented: “We would like to thank “Industrial Company” for offering the people of Armenia an opportunity to own a share in one of the largest industrial assets of the country. This practice that is common in mining worldwide can be a demonstration for the people of Armenia of how the notion of stakeholder capitalism and shared values work in practice. We are confident that this joint project will be a start for a better governed, more inclusive and sustainable mining sector in Armenia, that will benefit the country and its investors”.
UK’s determination to lobby for the troubled Armenian Amulsar mine
Internal correspondence released under a freedom of information (FOI) request shows how the UK Embassy in Yerevan sought to discuss Lydian International’s $400m Amulsar gold mine with the Armenian prime minister’s office in 2020.
The UK has supported Armenia’s attempts to clean up its mining industry – long associated with corruption, pollution and poor environmental standards – and Lydian, originally a Jersey-registered company, was a flagship project in this responsible mining drive.
But Amulsar has been at the centre of public controversy since Armenia’s 2018 “Velvet Revolution”, when it was blockaded by local residents and environmental campaigners over ecological and social impacts, forcing a standoff between international development banks that supported the mine, the Armenian government and those against the project.
Both the US and UK have ‘pressured’ Armenia’s new government during the confrontation over the mine, according to a confidential EU report obtained by openDemocracy in May 2020. Other records released by the UK Foreign Office showed regular records of meetings between the Jersey-registered mining company and the British Embassy in Armenia in 2013-2018.
The new Foreign Office correspondence released under FOI is largely redacted on grounds of commercial confidentiality and potential damage to international relations. But the documents show how, for example, in September 2020, UK embassy staff in Yerevan prepared to engage with the Armenian government on the controversial mine, using a new national policy initiative released a few days earlier.
“I understand that work on the National Transformation Strategy is being led at the strategic level by in the PM’s Office – so the strategy would be a useful area of conversation to lead with if we wanted to discuss Lydian with him,” read one email, dated 24 September 2020, as part of an email chain titled “Proposed Meetings”.
The Armenia Transformation Strategy 2050 is a policy initiative released by prime minister Nikol Pashinyan’s government on 21 September last year. It aims to foster dialogue and solutions for Armenia’s development towards 2050.
“It is the role of diplomatic missions to talk to host governments on a wide range of issues, including in support of UK businesses,” said an FCO spokesperson. The Armenian prime minister’s office did not respond to a request for comment.
Lydian has called the mine blockade illegal, and accused the Armenian government of “inaction” over the situation. Indeed, in March 2019, Lydian notified Armenia of a potential international arbitration dispute under British and Canadian bilateral investment treaties over what it calls an “ongoing campaign by the Armenian Government targeting Lydian’s investments in Armenia”.
To address concerns over environmental impacts, in August 2019 the Armenian government published a specially-commissioned technical report on Lydian’s environmental mitigation measures.
Though the report detailed significant areas where Lydian’s measures fell short, it did state that the possible impact on nearby water sources in Jermuk and Lake Sevan was nil. The government did not order a new environmental impact assessment to be drawn up – and Pashinyan gave the project a green light on the basis that “not even one litre of polluted water will reach [Lake] Sevan or Jermuk”.
In response, the company said it was “deeply disappointed” with the report, and noted that an independent auditor had found the company in “substantive conformance” with international standards.
A year later, protesters returned to the Amulsar site after the company hired a new private security firm and removed a trailer belonging to activists – with tense scenes between protesters and the private security team broadcast on national media as a result.
“During these protests, the police detained 10-20 people and opened administrative cases against them for refusing to obey police orders,” said Tehmine Yenoqan, an activist and resident of Gndevaz, who also noted that Lydian had opened defamation cases against activists for speaking publicly against the company.
“It makes us think: if we decide to come out and protest again, who will defend us – when they can lock activists up?” Yenoqyan continued. “The government and the prosecutor’s office is working in Lydian’s interests, and this pressure has an effect on people – although in the last two and a half years, of course, we’ve seen everything under the sun. That said, they’ve defeated the hardest resistance, and they’ll defeat what comes next.”
While prime minister Pashinyan appears to have approved the project, he has also sought to assuage those who are against the mine.
“There are both supporters and opponents of the exploitation of Amulsar in Armenia. And we must come to a balanced solution,” he said in Jermuk, a town located close to the mine site, in June 2021. “When the government develops a specific proposal, I will personally come, and we will discuss everything and give a solution to the issue together taking into account every detail.”
Previous correspondence obtained after an FOI request by openDemocracy suggested that the UK had lobbied closely for the Amulsar gold mine with Armenia’s former government, including monitoring the public statements of environmental activists in the country, and interceding in a previous dispute in 2013.
Foreign Office emails from the height of the crisis over the mine in 2018 have largely been redacted under international relations exemptions, but contain subject lines such as ‘Possible meeting with Armenian PM – urgent advice requested’, ‘Questions for the Ambassador’, ‘Meeting with Acting PM Pashinyan key points’ and ‘Readout of meeting with Lydian’.
Across the border in neighbouring Azerbaijan, the UK government recently supported opening up Nagorno-Karabakh, over which Armenia and Azerbaijan fought a brutal 44-day war last year, to mining by a UK company.
Monitoring the risk
The past 18 months has seen Lydian International go through corporate restructuring after the blockade prevented work from going ahead. As a result, the mining group is now owned by its three senior lenders, the investment firms Orion Resource Partners, Osisko Mining and Resource Capital Funds.
The European Bank for Reconstruction and Development’s investment in the project has since been terminated as a result of the company’s restructuring. An independent monitoring mechanism at the London-based multilateral development bank is currently considering whether its equity investment in Lydian was in line with its environmental and social policy.
“One of the keys to [the company’s] success is the dialogue which Lydian has conducted: with the Armenian government, local authorities, civil society and perhaps most crucially with the local communities,” said Judith Farnworth, then UK Ambassador to Armenia, at the project’s launch ceremony in 2016. “Through this engagement Lydian has provided assurances that it is committed to responsible mining, bringing economic and social benefits to Armenia whilst respecting the importance of environmental protection.”
But while the UK Foreign Office has lauded environmental and social standards at Amulsar, including local engagement, support for the mine has placed it in a tense confrontation with local residents and environmental campaigners. In 2018, 3,000 residents of Jermuk signed a petition against mineral mining in the area. The EBRD and World Bank’s International Finance Corporation, a former financial supporter of the project, have also received several complaints by local residents.
“The UK (and US) has taken a lot of flak from civil society, despite the project receiving funding from the World Bank and the EBRD,” reads a Foreign Office email from August 2020. “Our line to the various [parliamentary questions] and queries we’ve received is that British Embassies support British business in new markets and this is a normal part of our diplomatic work.
“In addition, on the current stand-off between the protesters and the company, we stress that we want all sides to engage in dialogue to overcome this impasse. The reality is that the case is likely to end in the courts.”
The correspondence also made reference to a ‘ministerial letter’ regarding Lydian. The Foreign Commonwealth and Development Office has refused to release it.
Beyond the environmental impacts, however, Armenian journalists have also raised concerns about the land acquisition process at Amulsar.
In January 2021, Hetq, an Armenian investigative journalism outlet, published information regarding land sales at Gndevaz, the village where Lydian’s Amulsar mine site is based.
According to Hetq, a number of local public officials and their relatives had bought land plots for several hundred dollars each – mostly during early stages of exploration but also after – and then sold them at much higher sums to Lydian during the land acquisition process in 2015 and 2016.
This included the head of Gndevaz village council, who was later charged, together with his son, with abusing his official powers over the sale of a single land plot to Lydian. That case continues to be heard in court, and no final verdict has yet been made.
During the land acquisition process as a whole, Hetq reports, the company bought 278 plots of land – from 152 owners for an approximate total of $2.8m. Around 20 people, mostly local officials and their relatives, sold their land plots for a combined total of $2.1m to the company.
In an email to openDemocracy, Lydian’s Armenian branch stated that the “basis for land purchases was the location of the lands and not the status of the landowners.”
The email continued: “The implemented land acquisition by Lydian Armenia was unprecedented in Armenia and was in line with the international best standards and principles as well as the Armenian legislation.” Lydian added that it “ensured engagement with affected households” by holding meetings, providing updates and collecting feedback from residents.
“The same equal conditions and principles were used while evaluating all the lands, including the detailed evaluation of existing trees and plants on the land, their age and quantity, and fruit yield and not the market price of the lands only,” Lydian continued, stating that there were no complaints or court cases against the company over the land acquisition process.
The unfinished Amulsar mine was set to employ 750 people once online, with another 3,000 jobs created by local companies linked to the mining operation. Company projections place the number of its tax and royalty contributions to the Armenian state budget at €432 million through the ten-year operation of the mine.
“Any sector-specific projects which are directly related to the mining industry may present an increased risk of reputational damage,” reads an excerpt from an undated 2020 “country register” for Armenia provided by the Foreign Office.
“Staff in embassy are monitoring the risk,” the entry on Amulsar continued. “It has been escalated through the FCO but no actions have been recommended.”