The International Finance Corporation (IFC), a member of the World Bank Group, has offered to invest $40 million in a large-scale gold mining project in Armenia which is due to be launched soon by a British-based company.
The investment pending final approval by the IFC’s governing board would remove one of the last hurdles to the start of open-pit mining at the Amulsar deposit in the southeastern Vayots Dzor province.
The company, Lydian International, has pledged to create 770 permanent jobs at Amulsar and earn the Armenian state around $490 million in tax revenue over the next decade.
Lydian estimates that it will need around $400 million to build mining and ore-processing facilities in the mountainous area. It secured $325 million of the required investments from two U.S. equity firms in November.
The company announced on Thursday that the IFC, which already holds an 8 percent stake in Lydian, has “proposed to invest” another $40 million in what will be the second-largest gold mining operation in Armenia.
“We are pleased to have IFC join with [the equity firms] Orion and RCF to provide financial and other support during the Company's development of Amulsar,” it quoted Howard Stevenson, Lydian’s chief executive, as saying.
“Subject to all conditions being satisfied, completion of IFC's investment is expected by the end of June 2016,” the Amulsar operator added in a statement.
Armenian environment protection groups have for years opposed open-pit mining at Amulsar, citing the gold deposit’s proximity to Jermuk, the country’s largest and most famous spa resort.
Both Lydian and the Armenian government have sought to dispel these concerns, saying that the company will use advanced technology and strictly adhere to environmental safety standards. The IFC as well as the European Bank for Reconstruction and Development have lent credence to these assurances by buying major stakes in Lydian.
The U.S. government has also signaled support for the mining project financed by American investors. Richard Mills, the U.S. ambassador to Armenia, joined Prime Minister Hovik Abrahamian in visiting Amulsar in August.
An ensuing statement by the U.S. Embassy in Yerevan quoted Mills as describing the project as an “important economic opportunity for Armenia.” The envoy at the same time stressed “the equal importance of ensuring that potential harm to the environment is minimized.”