PM Pashinyan Approves Amulsar Mining

Holds Lydian LTD to highest environmental standards ever

Photo: Lydian Armenia Facebook

YEREVAN—Prime Minister Nikol Pashinyan has announced his government’s intention to approve the resumption of excavation activities at the controversial Amulsar mine. In a late-night Facebook-live session on Monday, the Prime Minister explained that the decision resulted from carefully analyzing the results of the latest independent environmental impact assessment published last week.

Pashinyan reminded his 6500 live viewers of a statement he made in September laying out his government’s conditions for authorizing the resumption of construction on the mine. These requirements included three criteria: 

  1. That there would be no danger of contamination to Lake Sevan 
  2. No adverse effects to the hot-water springs of the alpine spa town of Jermuk
  3. That there be no risk of leakage from the mine into the neighboring Darb, Vorotan and Arpa rivers

“Jermuk and Lake Sevan are part of our national heritage,” he declared Monday. “I am not prepared to risk losing either of them at any cost.”

Pashinyan said he was satisfied with the results of the latest Environmental Impact Assessment (EIA) drafted by the Beirut-based environmental and water management consultancy group ELARD. According to the firm’s findings, the mine poses no risk to Lake Sevan or Jermuk, with minimal risk of contamination to local rivers. The document restricts its conclusions to the ecological impact of the mine. It does not offer any judgement on the legality of the mining contract. While it largely concurs with previously conducted EIAs on the matter, this report highlights critical areas for improvement, recommending 16 measures to mitigate any risk of water contamination and better comply with regulatory standards. Lydian confirmed that it is already implementing 10 of the suggestions and will work to comply with the remaining six.

Environmental groups, which have campaigned against the mining project since its launch, remained unconvinced by the latest findings. Around 100 protesters gathered in front of the National Assembly on Monday, chanting “We are the masters of our mountain” and “Save Amulsar.” “The mine will benefit a few for a short time, but its environmental impact will hurt many for a long time,” said a protester during an interview with the Weekly. Police cleared an attempt to block the adjacent Baghramyan Avenue. The Prosperous Armenia Party (PAP), which ironically formed part of the previous government that approved the Amulsar concession in the first place, voiced its support for the anti-mining activists. Joining protesters in front of the National Assembly, PAP leader Naira Zorhabyan declared, “Our party will oppose the launch of the Amulsar gold mine if the people of Armenia are against it.”

Amulsar mining protest, Yerevan, August 19, 2019 (Photo: Raffi Elliott)

Meanwhile, critics have been scrutinizing the 190-page report in the hopes of uncovering some potentially serious deficiencies in the assessment process. The lack of sufficient data at ELARD’s disposal to effectively analyze environmental risk beyond the immediate area surrounding the mining site has caused some concern over the validity of the assessment. Additionally, the ELARD report suggested that earlier EIAs may not have thoroughly tested the effects of acidity on adjacent mineral formations. Other troubling findings in the document deal with inaccuracies with the projection models used by Lydian to determine seepage of polluted liquids from the mine into waterways. 

Addressing those concerns in his broadcast, the Prime Minister explained that the choice of ELARD to conduct the study followed a recommendation from the New York-based non-profit Natural Resource Governance Institute. “I took it upon myself to read all the correspondence and all the concerns which you sent me at the expense of many sleepless nights,” said Pashinyan. “I can assure you that the investigation which I authorized took every aspect of the case into careful consideration.”

Not all members of Pashinyan’s cabinet shared in his satisfaction with the findings. Deputy Speaker of Parliament and senior member of the governing Civil Contract Party Lena Nazaryan expressed her apprehension on Facebook: “It’s hard for me to believe that I read the same report as the Investigative Committee and came to the conclusion that the risks were manageable.”

Amulsar has been embroiled in controversy since the Anglo-Canadian mining consortium Lydian International LTD won the rights to extract gold deposits from the site in Armenia’s Vayots Dzor province in 2012. Given the previous Republican-led government’s notoriety for corrupt dealings, environmental activists have long suspected the presence of foul play in the contract negotiation process. Lydian International, which trades on the Toronto Stock Exchange, has repeatedly dismissed this accusation as frivolous. As a publicly-traded company, Lydian says it is subject to Canadian mining regulations as well as corporate criminal law.   

For historical reasons, many Armenians remain deeply distrustful of the government’s dealings with big business. Previous environmental regulators have allowed government-connected mining projects to wreak havoc on the country’s ecosystem due to poor ecological protection implementation, inadequate regulatory oversight and rampant corruption. Cases like the bankrupt Teghut open-pit mine and the high rates of health complications caused by the Alaverdi Copper Smelter highlight the sort of ecological devastation caused by the government’s inability or unwillingness to enforce environmental regulations.

But Lydian insists that it’s different. The mining giant routinely presents itself as an example of environmentally safe, socially responsible and economically beneficial mining practices. The company points to the publicly available environmental impact studies, projected tax revenues, labor practices and investor lists on its corporate website as evidence of its commitment to transparency. The Amulsar mine is also the only one in the country to meet international standards for ecological and employee safety. Lydian has also touted its track record in community engagement. The company has allocated hundreds of thousands of dollars for infrastructure projects and has provided one-thousand well-paying, medium and long-term jobs in a region suffering from chronic poverty. The firm says it is committed to minimizing its footprint on the area, having earmarked $25 million to decommission the mine and restore the site to its original state once operations conclude.

The primary ecological concern over Lydian’s mining operation is its location. Amulsar sits atop a seismically active area, inducing fears that acid rock seepage from the site could contaminate Lake Sevan’s underground drainage basin, Jermuk as well as other river systems in the area.

Lydian has repeatedly downplayed these concerns, insisting that it employs a state of the art contamination prevention technique known as “encapsulation” to eliminate acidity during the gold extraction process. However, as a gesture of goodwill, the company also agreed to use traditional mitigation methods as a fail-safe. 

This concession has not been sufficient to sway opposition. In June of last year, a group of environmental activists blocked access to the mining site which was weeks away from launch, sending Lydian stock into a nosedive and forcing the firm to lay off hundreds of mostly-local workers. The company eventually won an injunction to remove trespassing protesters from its property.

More radical activist groups, such as the Armenian Environmental Front (AEF), have attempted to romanticize the standoff by framing it as resistance by locals against the colonial ambitions of greedy foreign multinationals backed by “corporate courts.” However, this portrayal has been disputed by some of the locals themselves. In an open letter to the Prime Minister, several villagers contended that they welcomed the economic prospects offered by the mine. They also depicted the protesters as but a “small group of people who have taken it upon themselves to speak for the entire community.”

Pressured by company executives, environmental activists as well as foreign diplomats, the Armenian Investigative Committee launched an inquiry in July 2018 to examine claims of willful concealment of environmental pollution data regarding the mine. The Lebanese consulting firm ELARD was contracted as part of this investigation to review the results of the previous two environmental assessment studies on the mining site.

In a dramatic escalation, Lydian International’s subsidiaries in the United Kingdom and Canada filed arbitration requests with their respective governments under bilateral agreements with Armenia earlier this year, stopping short of launching litigation procedures. Despite the threats, the mining consortium has closely cooperated with the investigation. An official communiqué published online invites authorities “to continue amicable discussions with Lydian with a view to the prompt settlement of the disputes.”

The Prime Minister’s permission to resume mining on Monday helped settle the matter before it reached the courts. Pashinyan stressed that his decision does not let Lydian off the hook. “I explained, in no uncertain terms that we will subject their operation to the strictest environmental monitoring standards ever implemented in Armenia,” he announced.  “If the mine so much as leaks a drop into the surrounding rivers, they will be given 90 days to clean up or face immediate termination of their contract,” he asserted. 

The Amulsar affair will likely mark a watershed moment in Pashinyan’s premiership. Months earlier, he had touted his country to investors, declaring Armenia “open for business.” As the largest single foreign investor in Armenian history, Lydian International is expected to invest over $400 million into the Amulsar project over its lifetime. Had this case gone to litigation, experts speculate that Armenia would almost certainly have been forced to provide compensation of up to $1 billion (roughly eight percent of the country’s entire GDP). Such an eventuality would have likely caused irreparable damage to Armenia’s reputation as an investment-friendly country at a crucial time when foreign capital inflows are most desperately needed. The weight of this predicament was not lost on Pashinyan, who ended his Facebook Live broadcast with a parting remark: “As a country, we must stand by our commitments, or we will never be taken seriously.”

The controversy over the Amulsar mine project has erupted into one of the most polarizing issues facing Armenian society since last year’s Velvet Revolution. The cause has also reverberated in Diaspora circles, many of whom provided financial assistance to the protesters. Last month, members of the Boston-based progressive activist collective Zoravik handed a petition to visiting Parliamentary Speaker Ararat Mirzoyan calling for the Amulsar mine’s closure. “We stand with the communities of Jermuk and Gndevaz. We stand against mining in Amulsar,” read their communiqué.

In Armenia, public debate has been centered on seemingly antithetical obligations: respecting due process and encouraging economic development at the risk of ecological degradation. How Armenians decide to apply these concepts may have far-reaching consequences for the roughly 400 mines of various sizes and environmental conditions currently operating in Armenia. Arshak Tovmasyan, who publishes the Yerevan-based magazine Regional Post – Caucasus summed up the broader existential implications in a Facebook post: “Amulsar should push us to contemplate who we are as a people. The decision will reflect what sort of values and what kind of State we want to build.”

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Raffi Elliott

Columnist & Armenia Correspondent
Raffi Elliott is a Canadian-Armenian political risk analyst and journalist based in Yerevan, Armenia. As correspondent and columnist for the Armenian Weekly, he covers socioeconomic, political, business and diplomatic issues in Armenia, with occasional thoughts on culture and urbanism.

23 Comments

    • if areas which would be directly affected by the mining operation will not be impacted then how does this translate into inconclusive effects outside the mine operation yet unavailable and needing further study?

    • environmental impact studies beyond the mine sites as determined by a nucleus of experts in their related field of expertise must be consulted before a decision to move forward is made despite any economic benefits made from such an arrangement. with 400 mines currently in operation and possibly far removed from the proposed amular site that is the question i would hope that the same standards and safeguards were used.

  1. So there are 400 mines currently operating in Armenia, but only the Amulsar project, which applies the highest environmental protection measures known to-date is being the object of protests !!!!
    Isn’t Mrs. Lena Nazaryan the young woman who in Feb 2013 had the audacity and effrontery to interrupt the OSCE Observation Mission’s reporting telling them that they were blind and naïve and that she knew better than them about the election results? No wonder she “read the same report as the Investigative Committee” and came to a different conclusion.

  2. Thank you for this informative piece, Raffi. I do, however, take issue with your characterization of the Armenian Environmental Front’s framing of the standoff between the local Amulsar water protectors and “greedy foreign multinationals” as “romanticize[d].” The David and Goliath standoff between the Amulsar activists and the Anglo-Canadian Lydian corporation is very real precisely for, as you say, “historical reasons.” From its very beginning successive Armenian governments have made backroom deals at the expense of the Armenian people and homeland. The Amulsar protesters and people of Jermuk know exactly what they’re doing: taking a principled stand in the face of the predations of foreign investment and so-called development. The only reason that Pashinyan gave the green light to Lydian is their odious ISDS (investor state disputes settlement) lawsuit against the Armenian government. Between the threat of what should be an illegal lawsuit and a concern for optics (i.e. Armenia as a place that’s open to foreign investment), it’s understandable how Pashinyan found himself between a rock and a hard place. Making a decision under such circumstances only underscores the fraudulence and hypocrisy on both sides: environmental degradation and catastrophe can’t be mitigated away. There’s no such thing as safe mining, especially on seismic fault lines. Diasporan Armenians need to stand shoulder to shoulder with the Amulsar land and water protectors and not be seduced by the shiny lure of predatory capital investment. For those of you who continue to belief that the Lydian mining project will benefit Armenia and Armenians, with minimal impact to the air and water of the region, you need to think again: the Amulsar mine is “100% Lydian owned” and all profits will leave Armenia, like so many investment schemes before, and leave the people, air and water in the Jermuk region… in the gold dust. See:
    https://www.globenewswire.com/news-release/2019/05/15/1825682/0/en/Lydian-Announces-First-Quarter-2019-Results-and-Corporate-Update.html

    • They won the rights. They paid the money. They invested heavily in construction on the land they paid for and continue paying taxes on. They filed all required permits. They submitted to the ELARD audit. ELARD cleared them. They met Pashinyan’s demands at the outset. You have the audacity to frame this as Armenia versus the Anglo-Canadian Lydian? All that does is show your lack of understanding of economics and it highlights your obvious communist political leanings as you want to nationalize land and industry. I suspect you have a political corruption problem but you also have a communist traitor for hire problem too.

  3. The question is will the protesters and their foreign supporters pay the compensation, in case Lydian takes this to court? Obviously, the answer is a big no. If this was a new contract being singed by Pashinian, then at least the protests would have been understandable. You can argue that mining is too damaging to the environment and the new government should come up with better plans to attract investment. The problem is that Lydian has already invested millions and the contract was signed years ago. It is extremely unlikely that any international court will side with Armenia if this ends up in court. No matter what you say, Serjik was the internationally recognized president of Armenia and any document signed by his government is valid. If Armenia refuses to pay compensations, it will become a pariah and no one will do business with it, not even WB or IMF. I think the government has done a lousy job explaining these things to people. Millions of dollars of investment and jobs with minimal environmental damage vs millions paid in compensation and no damage to environment.

  4. Thank you for the report, Elliott, and thanks, everyone, for your comments. I had the benefit of skimming through the 145-page long version of ELARD’s report. My reading of it is that ELARD is highlighting some important deficiencies in Lydian’s own assessments. If these deficiencies are addressed, the mine will comply with international (not only Armenian) minimal standards and so it will not put the environment at risk. As a lawyer with passion for environmental protection, I understand the fear of the pollution, but I understand Mr Pashinyan’s position more. If the deal should not have been made in the first place, that’s too bad. But I don’t see what more can Mr Pashinyan do than insist on due diligence and give the project green light under governmental control.
    I’ll be very happy to discuss the issue with you further. Here’s my e-mail address: martin.madej@law.ox.ac.uk.

  5. Time for every Armenian to put their money where their mouths are and protest and make a point: no more $$ if you don’t close all these awful mines. Go solar, for Jesus sake and invest in clean energies instead before you destroy what is left of our small homeland..between that and Metsamor, ay.

  6. @ ritooli,
    FYI, Serj did not hand over the power to your top man, Nikolick, it was more like power grab by the latter. Therefore, your top man, Nicki, shoulders the responsibility of anything and everything problematic to Armenia. Nikole, should yield his position and let Mr. Kocharyan, run the country before It’s too late.

    • @Jay
      Your comment makes it seem as if your 11 years old. Robert, his predecessor and successor were/are garbage leaders. No same Armenian wants them back. Nikol hasn’t been in office long enough to lump in the same category but at least he still has a popular mandate. Same can’t be said about many western politicians.

  7. Pashinyan has not accomplished anything so far.
    He is very kin of social media and he has placed high value on appearances. This is not what Armenian people need. Unfortunately, he is a social media President.

  8. “But Lydian insists that it’s different. The mining giant routinely presents itself as an example of environmentally safe, socially responsible and economically beneficial mining practices.“ LYDIAN, the MINING GIANT? Give me a break! Have you checked out Lydian’s assets and market cap? BHP or Rio Tinto are mining giants, not puny Lydian!

  9. The residents of Jermuk knew very well that the PM was working with Lydian to start the drilling soon. Scores of families have bought apartments far from Vayots tsor and making arrangements to move. It will be such a pity to lose Jermuk’s health resort industry and culture (not to mention the thousands of jobs) just because the mountains containing gold mines were sold to Lydian.

  10. Not sure who has oversight on the mining and the Anglo-Canadian concerns doing the mining. Why would a foreign company care what happens in Armenia as long as they reap the$$$$$. Beware of Greeks bearing gifts.

  11. I am in Jermuk right now and every local that I have spoken to is opposed to the mine opening. Many believe that even in the case it avoids major environmental catastrophes, there will be such a reduction to tourism in the area that it’ll hurt the local economy in a big way. They seem determined to prevent it from happening.

    Also – Lydian is not a mining giant. This would be their FIRST mining project.

  12. Definitely not a mining giant. A small company, no proven record, first mining project.
    To put in financial perspective, here is the most recent data on the company.
    Value of share traded on The Toronto Exchange. Cnd $ 0.15. (fifteen cents). Basically a penny stock.
    Total Assets $ 399.5 million
    Total Liabilities $ 354.0 million
    Total Equity $ 45.5 million
    With an equity of $ 45 million, it cannot be considered even a small company.
    This was a bad contract from the start.
    It is a legal and financial mess.
    Vart Adjemian

  13. Beside environmental concerns,

    When currency values are falling on a global scale, Why is the Armenian government allowing a foreign government (British, which refuses to acknowledge the genocide btw) to extract and take the nation’s gold reserves ?

  14. I really like Pashinyan, I think he is someone who means very well and genuinely cares about the future of Armenia and Artsakh.
    However, I do call into question this decision. Looking at it from a broader spectrum, this is not very good. We are literally in a serious climate crisis. The UN informed the world that we are literally 12 years to radically act on climate change, shift away from fossil fuels, and switch to renewable energy and create green job. We must be saving the environment, not further polluting it, via fracking and mining.
    So Pashinyan, should really be having second thoughts about allowing the mining project in Amuslar to go through anyway. Adding to the fact there were serious deficiencies in this report, Armenia is in a region prone to earthquakes, and he should be working to deter them, and not put them on steroids and growth hormone, and further do the bidding of the fossil fuel industry.

  15. You can say that again. Nikolick, hasn’t been in the office long enough and the country is in a heap of a mess already. Him and his incompetent Facebook administration better vacate their position and let Kocharyan’s government run the country. It is obvious, Soros’ lapdog and his facebook administration is not up to the task.

  16. Jay,
    I agree with you on all accounts accept the part about former president Robert Kocharyan. While Kocharyan was arguably the best leader post-Soviet Armenia has thus far had (and that’s really not saying much at all), his time as a leader has long passed. Sadly, Kocharyan today is a divisive figure that is hated, albeit unjustifiably, by many Armenians around the world. In my opinion, Armenia’s real leader is former Prime Minister Karen Karapetyan. Had Serj Sargsyan not collaborated/conspired with the the NED, George Soros and British Counsel led regime change agenda last year, Karapetyan would have been Armenia’s leader today. Karapetyan is one of the very few individuals in the country today that is actually capable – and worthy – of a leadership role.

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