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Amulsar gold mine, Armenia

The controversial Amulsar gold mine near the touristic spa town of Jermuk was supported by the EBRD equity investments, but blocked by locals after the velvet revolution in 2018. In spite of a number of legal threats and intimidation by the company, the blockade continued till the eruption of military conflict overNagorno Karabakh (Artsakh) at the end of 2020.

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The project was long contested that it posed a threat to the environment and economic livelihoods, as the mining and use of cyanide to leach gold would impact the Arpa and Vorotan rivers, and Lake Sevan. 

In March 2020, CEE Bankwatch and Armenian CSOs filed a complaint to the Secretariat of the Convention on the Conservation of European Wildlife and Natural Habitats (‘Bern Convention) against the Armenian government alleging violations of protected natural areas near Amulsar. The Secretariat recommended that the authorities ‘halt any developments that can negatively affect the habitats and species protected under the Convention’.

In June 2020, 23 people living near the project site, Armenian and international civil society groups including CEE Bankwatch Network submitted a complaint to the EBRD Independent Project Accountability Mechanism (IPAM) alleging a non-compliance with the EBRD standards. Apart from the environmental risks, they highlighted an exclusion of the affected community from decision-making and undermining the social licence, increased social tension and negative impact on cultural heritage. 

In 2021, following the discovered evidence of the corrupt land deals in Gandevaz, a group of NGOs filed another complaint to the bank’s Chief Compliance Officer (OCCO).

Key facts

– The European Bank for Reconstruction and Development (EBRD) extended EUR 7 million in equity to Lydian in 2017, which were 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 EBRD exited the Amulsar project after Lydian International restructuring in 2020

– 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 

– 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 blocked the access roads to the mine. 

– Since July 2018 the government of Armenia is conducting inspections but no conclusions have been made so far. 

Key issues

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. Apart from it, confirmed uranium deposits in the project area might multiply the risks of radioactive contamination.

Livelihoods: in addition to claiming agricultural lands, the mine will alter the economic prospects and social fabric of communities by causing an influx of migrant workers and transformation of Jermuk from a spa into a mining town. Local agricultural producers, fish farms and mineral water producers are under threat due to risks of environmental pollution. 

Background

A test for Armenian democracy

As part of his rise to power, Pashinyan had promised to investigate whether the Amulsar project was in line with Armenian legislation. The Armenians still expect him to make good on this campaign promise.

The government initiated inspection and commissioned additional studies to assess if the company was operating in accordance with Armenian law.

In 2019, an independent assessment of impacts of the Amulsar gold mine was conducted by ELARD and partially confirmed the environmental concerns around the project. However, no decision has been made by the government as a result.

Amulsar - another troubled project?

Low trust in Amulsar promoter’s assurances of safety and high standards is rooted in Armenia’s checkered track-record with mining projects. The EBRD presented the Amulsar mine as an exemplary project, giving it a stamp of approval and an equity injection.

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. 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 mining and cyanide leaching posed a threat to their environment and economic livelihoods. 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 water and 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. 

Suppression of civil society

Strategic lawsuits against public participation (SLAPP) are a form of often frivolous litigation used by corporations to intimidate and punish critics and silence their right to free speech. Lydian International repeatedly deployed the SLAPP tactic against journalists and civil society. It filed no less than 15 suits against dissenting voices, largely as an attempt to silence criticism of the Amulsar mine. In August 2020, the Armenian protestors who had been blocking access continuously for the past two years to the controversial Amulsar gold mine were forcibly removed by the mine’s newly-hired security detail. It triggered massive confrontation between protesters and the security personnel resulting in injuries and arrests of some activists.

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