Armenian authorities do not consider danger of losing city of Jermuk  as resort of int`l significance - NGOs declare

ArmInfo. A group of public organizations and residents of the city of Jermuk opposed the  possible development of the Amulsar gold mine.

The joint statement issued by them emphasizes that by accepting the  gift of 12.5% shares of the Lydian Armenia company, which is  developing the mine, the Armenian government ignored democratic  values and the rights of local communities.

The authors of the statement recall that the decision to take  ownership of the shares was made on January 18 at a government  meeting chaired by Prime Minister Nikol Pashinyan. Then it was  announced that this "gift" "belongs to the people of Armenia" and  that "the development of the Amulsar mine according to this model  dispels many fears."

"With this statement we express our outrage at the irresponsible  actions of the government, since besides the fact that these fears  did not disappear, they intensified. The best international and  national experts and scientists have confirmed the environmental,  social, economic risks and dangers that the Amulsar project poses,  casting doubt on the conclusion of the EIA for the mine development  project presented by the RA Ministry of Nature Protection. A full  environmental assessment was not ensured, and the results of 2019  were not taken into account. The results and conclusions of a study  conducted by international companies as  ELARD and TRC are presented,  for the preparation of which 454 thousand US dollars were allocated  from the state budget", the statement notes.

Moreover, according to its authors, the negative impact of the mine  on water resources was not taken into account - Lake Sevan, the Arpa  and Vorotan river basins, the Spandaryan and Kechut reservoirs. The  risks associated with the presence of radioactive elements at the  Amulsar mine - uranium, thorium, as well as radon, and the problem of  environmental pollution with dust containing a huge amount of toxic  elements that could arise as a result of the development of the mine  were ignored. The risks associated with the use of cyanide  technology, which is banned in several countries around the world,  were ignored.

A statement from a number of NGOs emphasizes that the risk of losing  the city of Jermuk as a resort of international importance was also  not taken into account. If the mine is developed, Jermuk will turn  into a working city, the city's residents will emigrate, and the mine  workers will leave Jermuk after its development is completed.

The EIA conducted by Lydian and the state environmental assessment  process did not include the city of Jermuk among the affected  communities as a whole, nor did it take into account the destructive  impact of mining operations on it. The risks to the health of  residents were not taken into account, and the appropriate  examination and medium- and long-term assessment of this risk were  not carried out. The possible negative impact on Jermuk mineral water  and on the international obligations undertaken by Armenia under the  Berne Convention for the Protection of Wildlife and the Natural  Environment were not considered at all.  The opinion and resistance  of the population of the affected settlements and the public against  the Amulsar project were not taken into account. In particular, in  the fall of 2018, about 3 thousand residents of the enlarged Jermuk  community expressed their disagreement with the use of a gold mine.

"Due diligence was ignored or insufficient effort was made to assess  the previous operating style of Lydian Armenia CJSC, its pattern of  illegal actions, the use of violence against citizens and the  prosecution of local residents. Once again, state resources were  transferred to a company registered in an offshore zone , with  unknown owners and in financial crisis. This phenomenon of  prosecution of citizens in the world has been called "strategic  lawsuit against public participation", which does not bring honor to  any state, especially to a state that declares itself democratic.  Meanwhile, the state bodies of the Republic of Armenia have never  made any attempt to prevent this evil practice, to protect citizens  who support local democracy, environmental protection and human  rights defenders," the statement said.

The document also emphasizes that the decision did not take into  account the aggressive actions of Azerbaijan on September 13, 2022,  when the armed forces of this country invaded the territory of  Armenia, bombing the city of Jermuk. "According to Amulsar's plan,  tens of thousands of tons of toxic and dangerous chemicals and  explosives with a shelf life of hundreds of years should be stored  and used in the vicinity of Jermuk, which in the event of hostilities  will become a danger not only for Jermuk itself, but also for Lake  Sevan , Vayots Dzor, Syunik and Ararat regions, the Vorotan River,  the waters of which, as a result of pollution of the catchment basins  through the Arpa-Sevan tunnel, will begin to flow into the  Gegharkunik region," public activists warn.

They also recalled that in 2014, by decision of the RA government, it  became possible to relocate plant species listed in the Red Book from  their natural habitat, which contradicts Article 17 of the RA Law "On  Flora". This decision made it possible to obtain permission to  develop a mine in the Amulsar area. In 2015, by decision of the RA  government, the permissible slope of mine roads was changed. Thanks  to this solution, security requirements were relaxed and Lydian saved  approximately US$100 million. In 2016, in a memorandum signed between  the Ministry of Nature Protection and the Lydian company, the company  promised to invest 5 million US dollars and establish Jermuk National  Park within 5 years, which has not been done so far. In 2022,  amendments were made to the Subsoil Code, thanks to which the Lydian  company was retroactively allowed to extend the right to use subsoil  without conducting a new EIA, despite public resistance over the  previous 4 years. Only Lydian benefited from this change, which  suggests that the legislation was changed specifically for this  company. This decision of the RA government creates new financial and  legal risks for the Republic of Armenia.

The statement also notes that Lydian went bankrupt several years ago,  reorganized and transferred ownership to its main shareholders. The  two largest financial institutions - the International Finance  Corporation (IFC) of the World Bank Group and the European Bank for  Reconstruction and Development (EBRD), which were initially the  guarantors of the "high international standards" of the Amulsar  project, are no longer shareholders and investors of this company.  "Lydian Armenia" is the same company that several years ago filed two  lawsuits against the RA government, announcing the start of an  arbitration process. "Then representatives of the RA government  expressed concern that if Amulsar was not developed, they would  extort a lot of money from the state, ignoring the fact that a  company registered in an offshore zone does not have the right to  apply to an arbitration court. Now, it seems, the company has managed  to obtain such an opportunity from the RA government. "We have  repeatedly warned that if Lydian begins to operate after registration  in Canada, and is then forced to stop this operation for some reason,  it will already be able to use the mechanism of arbitration courts,  which was created to protect the interests of private individuals.  What will Armenia do if the company starts construction and then is  unable to continue work due to some force majeure? The Azerbaijani  troops already control Jermuk on the outskirts of the city. In the  past, they bombed the Yeraskh plant and forced investors to move it  away from the border. What guarantee does the RA government have that  the planned cyanide platform in Amulsar will not become a target of  an aggressive neighboring state? The Government of the Republic of  Armenia and the Prime Minister are obliged to ensure the security of  the Republic of Armenia and its people, but, unfortunately, we do not  see reasonable decisions and actions regarding the Amulsar mine. RA  Prime Minister Pashinyan declared the Republic of Armenia "a bastion  of democracy", but he acts on anti- democratic principles, regardless  of the opinion of the people themselves", stated the authors of the  statement, which was signed by over 130 public organizations and  individuals. 

On February 21, 2023, the Government of the Republic of Armenia,  Lydian Armenia CJSC and the Eurasian Development Bank (EDB) signed a  memorandum of understanding, which marked the possibility of  restarting the program for the development of the Amulsar mine. As  part of the memorandum, it was said that $150 million would be  raised, of which $100 million would be loan funds from the EDB, $50  million would be provided by a local bank, and an additional $100  million would be invested outside the agreement by shareholders. As  part of the deal, the Armenian government will receive 12.5% of the  company's shares, for which it will not pay anything, but instead  will insure the deal against certain risks.

Since the end of 2018, the Amulsar gold mine has been blockaded by  environmental activists. The government was unable to decide on the  resumption of construction of the mine and work on it had to be  suspended. In March 2022, Armenian Minister of Economy Vahan Kerobyan  noted that if nothing interferes, the work of the Amulsar gold mine  will be resumed, referring to the department's program of activities,  which contains a provision on solving the Amulsar problem.

Previously, before the change of beneficiaries, Lydian Armenia was a  subsidiary of the British offshore Lydian International, which placed  shares on the Toronto Stock Exchange. The company then had to undergo  a delisting procedure. As a result of the restructuring, the full  stake in the company passed to the newly established  Canadian-American Lydian Canada Ventures, the beneficiaries of which  are the American company Orion Mine Finance and the Canadian Osisko  Gold Royalties.

The total cost of the Amulsar project is $370 million. The period of  operation of the mine is about 11 years, and it is planned to produce  an average of 200 thousand ounces of gold annually. The mine  is the  second largest in reserves in Armenia. According to the company, the  mine contains approximately 73,733 kg of gold with an average grade  of 0.78 g per ton, as well as 294,367 tons of silver with an average  grade of 9.29 g per ton. It is located in the southeast of the  country, 13 km from the resort town of Jermuk, between the Arpa and  Vorotan rivers.