Armenia’s largest foreign investor, an international mining company Lydian, is developing the controversial Amulsar gold mine near the touristic spa town of Jermuk. In 2018 locals blocked access to the mine, having long contested that it posed a threat to their environment and economic livelihoods, as Lydian plans to use cyanide to leach gold concentrate.
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The concerns of local people in Jermuk and the surrounding villages of Kechut and Gndevaz were documented by Bankwatch and the Armenian social NGO ‘Community Mutual Assistance’ in a first-of-its-kind independent research into what local people know and think about the operations of Lydian. For more than a year now local protesters are partoling access to the mine, in spite of a number of legal threats and intimidation by the company.
As part of his rise to power, Pashinyan had promised to investigate whether Lydian’s operations were in line with Armenian legislation. Now Armenians expect him to make good on this campaign promise, although the company has threatened arbitration in an investor-state dispute settlement that can cost the country billions.
– The European Bank for Reconstruction and Development (EBRD) extended EUR 7 million in equity to Lydian in 2017, which are earmarked for the financing of Environmental and Social Mitigation Measures – The EBRD has previously invested CAD 5.8 million (EUR 4 million) equity financing for exploration and development programme of drilling and feasibility studies for the Amulsar project in 2009 – The International Financial Corporation (IFC) was one of the main shareholders (7.9%) in Lydian and invested USD 13 million in various stages since 2007, but eventually withdrew financing in 2017 – The company claims to bring USD 185 million annually to GDP (1.4% of Armenia’s total GDP) – Location: provinces of Vayots Dzor and Syunik in Southeast Armenia, about 6 kilometers from the spa town of Jermuk – The construction started in 2017 but has stopped in June 2018 when local people started blocking the access roads to the mine. – Since July 2018 the government of Armenia is conducting inspections and has commissioned additional studies to assess if the company is operating in accordance with the Armenian law. In case of negative assessment the operation permit could be annulled.
Health impacts: in a sociological study conducted in 2018, 85.7 per cent of respondents observed negative impacts on health, such as increasing asthmatic attacks, lung diseases, dry skin, headaches and insomnia. Environmental risks: the mine construction is at odds with the national legislation and international conventions for nature protection. The area has water and biodiversity-rich ecosystems, with a number of Red List species. Part of the mine is located within the borders of an Emerald site according to the Bern Convention on the Conservation of European Wildlife and Natural Habitats. The headwaters of the Arpa and Vorotan rivers are in the vicinity of Amulsar, and the mine also neighbours Armenia’s largest and most strategic water reservoirs, one of which is directly connected to Lake Sevan. A potential accident at the mine can, therefore, endanger the whole area, as well as Armenia’s largest freshwater lake. Livelihoods: in addition to claiming agricultural lands, the mine will alter the social fabric of communities by causing an influx of migrant workers. Tourism: located within a stone’s throw of a famed spa-town Jermuk, the mine operations can turn away potential tourists.
A test for Armenian new-found democracy
The wave of protest and activism that brought Nikol Pashinyan to power is now pressuring him to take action in Amulsar against the country’s biggest international investor. The demand of the local protesters is clear. Since mid-2018 they have been standing guard, blocking the mine roads.
Complying with this position, the government started additional studies to assess if the company is operating in accordance with Armenian law. In case of a negative assessment, the operation permit could be annulled.
“I’m sure that the government will hear us, otherwise the revolution will be useless if the government is going to treat us the way the previous government did,”
– one of the protesters.
Amulsar - another troubled project?
Low trust in Lydian’s assurances of safety and high standards is rooted in Armenia’s checkered track-record with mining projects. Lydian presented the Amulsar mine as an exemplary project, using the involvement of the EBRD and the IFC (until the IFC pulled out in 2017) as a stamp of approval from reputable international institutions.
A detailed review, however, shows that the Amulsar mine is not fully compliant with the EBRD’s requirements, and goes against multiple international treaties and national regulations, such as the Bern Convention on the Conservation of European Wildlife and Natural Habitats.
To make up for the damage to biodiversity, the company plans to establish a substitute Jermuk National Park in the nearby area using the EBRD financing. The new park would exclude areas affected by the mine by modifying the borders proposed by WWF Armenia in 2012. Such biodiversity offsetting measures aiming to compensate for a permanent loss of key biodiversity in the project area are risky, unpredictable, and incompatible with environmental laws in many countries, including Armenia, and international conventions.
Disrupted local livelihoods
Residents of a resort town Jermuk and the surrounding communities have long contested that the mine posed a threat to their environment and economic livelihoods, as Lydian’s plans to use cyanide to leach gold concentrate from the ore. To the spa-town famous for its healing waters, a toxic gold mining production at its doorstep is an unwelcome neighbour. The gold mine has already caused dust pollution, and its cyanide leaching technology poses a serious threat to tourism in Armenia’s ‘little Switzerland’ and could be detrimental to Armenia’s water resources, such as Arpa river and lake Sevan.