The U.S. government expressed hope on Wednesday that an environmental audit of a massive gold deposit in Armenia developed by a U.S.-based company will be conducted objectively and “in strict accordance with the law.”
It said it also expects the new Armenian government to carry out similar inspections of other mining companies operating in the country.
All roads leading to the Amulsar deposit have been blocked since June 23 by a group of residents of nearby communities protesting against gold mining operations planned there by the Lydian International company. They thus halted the multimillion-dollar construction of Lydian’s mining facilities which was due to be completed this fall.
The blockage is continuing despite repeated appeals from Prime Minister Nikol Pashinian. He has said that Lydian must be allowed to resume its operations pending the findings of an ad hoc government task force that will start inspecting the company soon.
The mining site remained blocked even after Pashinian visited the mountainous area about 160 kilometers southeast of Yerevan last week. He met with leaders of the protest and senior executives of the company employing more than 1,400 people. Many of those workers are also local residents.
Commenting on the continuing standoff, the U.S. ambassador to Armenia, Richard Mills, said: “We are pleased the government is conducting an environmental audit of Lydian’s Amulsar project, which was requested by those concerned with the project’s environmental impact and which must be standard practice for such projects.”
“We hope that it will be carried out in strict accordance with the law, engaging professional and impartial expertise. We also expect that these audits will be unilaterally applied across the mining sector,” Mills added in written comments to RFE/RL’s Armenian service (Azatutyun.am).
Pashinian promised in late May thorough inspections of “all metal mines” aimed at verifying and, if necessary, ensuring their compliance with environment protection norms and their tax obligations. He went on to assign that task to Artur Grigorian, the new head of an environment protection government agency.
Grigorian is a well-known environmentalist who has for years campaigned against the Amulsar project. He said late last month that Lydian will be the first company to be audited by a working group formed by him.
The group comprises officials from various Armenian government ministries, Lydian representatives as well as non-governmental activists strongly opposed to gold mining at Amulsar. It is supposed to submit recommendations to Pashinian’s government later this month or in August.
Pashinian said on July 6 that the government’s decisions on Amulsar must be based on “facts rather than emotions.” “If we make any unlawful step in this situation – even one that is deemed unlawful not necessarily from our standpoint but at least from the point of view of international relations – we may face major problems,” he warned.
Lydian, which claims to have already invested more than $300 million in Amulsar, has not ruled out the possibility of international legal action against the Armenian state that had granted it exclusive rights to mine gold there. It says that it has already lost at least $14 million as a result of the continuing disruption of its operations.
Environment protection groups say that the Amulsar project, if implemented, will contaminate air, water and soil in the area. They also point to the site’s proximity to Jermuk, the country’s most popular spa resort.
Lydian maintains that it will use advanced technology to prevent any damage to the local ecosystem. The company is registered in a British tax haven but headquartered in the U.S. state of Colorado. Its shareholders include U.S., Canadian and European investment funds as well as the European Bank for Reconstruction and Development (EBRD).
The mining project has been supported by the U.S. and British governments. Mills expressed confidence in 2016 that Lydian “will continue to serve as an example of responsible mining, operating transparently in line with international environmental and social standards.”
“Mining in Armenia is an opportunity to diversify the nation’s economy and increase the number of well-paying jobs, but only if mining operations are conducted to the highest international standards to protect the environment,” the U.S. ambassador said on Wednesday. “That is why the U.S. Embassy welcomed the interest in the Armenian mining sector from Lydian International, which operates mining projects around the globe that must meet international environmental standards.”
Mills did not say whether he thinks the Pashinian government’s possible decision to revoke Lydian’s operating license could hurt U.S.-Armenian business ties and scare away other foreign investors.
Lydian has pledged to invest over $400 million in what would be one of the largest business projects in Armenia’s history. It has said that it plans to produce roughly $250 million worth of gold and pay $50 million in taxes annually.
Armenia’s overall exports stood at $2.2 billion in 2017, according to official statistics. Non-ferrous metals and ore concentrates accounted for around half of them.