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Amulsar gold mining center of UK-Armenian complex dispute

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After Armenia’s 2018 “Velvet Revolution”, local residents and activists started a public campaign and blockade against a $400m international gold mining project. Campaigners have called on the UK to withdraw support from the Amulsar gold mining project, which is at the centre of a complex international dispute. An EU diplomatic report recently obtained by openDemocracy states that the UK and US have ‘pressured’ the Armenian government over the Amulsar mining dispute.

Emails obtained by openDemocracy show how the UK Foreign Office monitored the post-revolutionary public campaign against the mine – and indicate it lobbied the Armenian government during a previous gridlock in 2013

Internal Foreign Office correspondence suggests the depth of UK interest in an international mining dispute in Armenia, openDemocracy reports.

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Two years since a blockade was started at the $400m Amulsar mine, emails and briefings held by British Embassy Yerevan detail how the UK Foreign Office monitored the emergence of the mining dispute through the peak of the post-revolutionary public crisis in 2018.

Another set of emails, also released under Freedom of Information, show how the Foreign Office supported the company during a previous dispute with the Armenian government in 2013.

Access to the Amulsar gold mine, a major international investment by Jersey-based company Lydian International, was blocked by local residents and environmentalists in the weeks following Armenia’s “Velvet Revolution” in April-May 2018.

At that time, opposition politician Nikol Pashinyan helped mobilise a country-wide protest wave against corruption and authoritarian rule, eventually forcing the ruling Republican Party and its leader Serzh Sargsyan out of power. For Lydian, Armenia’s largest foreign investor, the change of government in 2018 and ensuing blockade at Amulsar led to a chain of investigations, audits and inspections – which were followed closely by the UK Foreign Office.

“These emails show the UK embassy was well aware of the serious risks the planned Amulsar mine poses – to water supplies, to jobs in tourism in the local economy, to public health and to the environment,” said Jean Blaylock, policy and campaign officer at Global Justice Now.

“The embassy also knew all about the levels of public opposition to the mine, not least because it was actively monitoring protestors’ Facebook posts,” Blaylock continued.

Lydian states that it has followed high international standards on environmental mitigation and protection. The unfinished mine was set to employ 750 people once it came online, with another 3,000 jobs created by local companies linked to the mining operation. Company projections put the number of its tax and royalty contributions to the Armenian state budget at €432 million through the ten-year operation of the mine. British Ambassadors to Armenia have backed the Amulsar mine publicly, citing high standards of environmental protection and local stakeholder engagement as set by the project’s international funders, the European Bank for Reconstruction and Development and World Bank’s International Financial Corporation.

Campaigners question how far environmental and stakeholder engagement standards have been implemented, and have drawn attention to the role of the UK Foreign Office in supporting Lydian International in its dealings – and after 2018, dispute – with the Armenian government. In August 2019, representatives of Armenian civil society called on the UK to withdraw its support for the mine over environmental concerns. In May, openDemocracy published an internal EU diplomatic report that stated the UK and US had ‘pressured’ Armenian prime minister Pashinyan over the mining project. The Foreign Office said it did not accept the characterisation and called it engagement on Amulsar ‘routine’.

“We would like to see all parties to the long-running dispute over the operation of the Amulsar mine continue to engage constructively to finding a way forward,” a Foreign Office spokesperson commented to openDemocracy.

As protesters blocked the Amulsar site and calls for inspections grew in the aftermath of the 2018 revolution, Foreign Office correspondence released under Freedom of Information shows how the British Embassy monitored the rising tide of official and public scrutiny in 2018 in detail, with the British Ambassador receiving monitoring reports of the situation surrounding Amulsar several times per week.

The British Embassy’s monitoring, which at times was sent to the Ambassador on a daily basis in summer 2018, covered public statements by Armenian environmental experts, the mining company and politicians, as well as reports on an environmental audit and background to the dispute. The monitoring, which then British Ambassador Judith Farnworth called ‘incredibly useful’ in one email, included collecting Facebook posts made by Armenian environmental activists during the 2018 events, as well as a detailed account of a key environmental audit of the project. Other emails have largely been redacted under international relations exemptions, but contain subject lines such as ‘Possible meeting with Armenian PM – urgent advice requested’, ‘Questions for the Ambassador’, ‘Meeting with Acting PM Pashinyan key points’ and ‘Readout of meeting with Lydian’.

On coming to power in May 2018, protest leader Nikol Pashinyan ordered inspections in Armenia’s mining industry. Pashinyan subsequently appointed a new head to the country’s official mining and environmental inspection unit, choosing environmental lawyer and civic activist Artur Grigoryan. The inspection, a state administrative body, began an inspection of Amulsar, alongside other mines, in early July 2018. Despite Pashinyan’s claims that the Amulsar protests were a form of ‘sabotage’ against the new government, the campaign against the mine continued, provoking counter demonstrations by Lydian employees in Yerevan, the Armenian capital. The tense post-revolutionary situation appeared to be taking a toll on a major foreign investor, with Lydian Armenia director Hayk Aloyan reporting on 2 July that the company had experienced financial losses as a result of the protests.

While Pashinyan attempted to calm the situation around the mine in late June and early July 2018, he also stated that he would have opposed the Amulsar project if he had been in power at the time. Several weeks later, on 20 July, an official working group was set up to examine how far Armenia’s mining companies operated according to domestic law and best international standards, with the first mine on the group’s list being Amulsar. The working group, comprising representatives of government, business, civil society and environmental experts, inspected the Amulsar site and reviewed Lydian’s environmental and social impact assessment.

On 24 July, Armenia’s Investigative Committee announced an investigation into allegations that officials from the Ministry of Nature Protection had concealed environmental information regarding the Amulsar mine. (In August 2019, the Investigative Committee published the results of a third-party audit and stated ‘there are no grounds for criminal prosecution and continuation of criminal proceedings’.)

At the end of July 2018, the Ambassador wrote to Foreign Office colleagues regarding the Amulsar situation. ‘I apologise if this seems downbeat, but it is important that I give you an accurate picture,’ the otherwise redacted email read.

The British Embassy’s reports contain a detailed account of the working group’s activities on Amulsar – stating members’ individual evaluations at length. When the group presented its findings in November 2018, Ambassador Farnworth received a summary of the proceedings.

‘The majority of the speakers claimed that the EIA [Environmental Impact Assessment] report of the project has serious gaps, the positive expert opinion was issued without proper study of the relevant documentation provided by Lydian Armenia,’ the email stated in summary of the working group.

‘And if the project reaches the operational stage, [most speakers claimed] it will be detrimental not only for the environment and for the health of the population, but also for the Armenian economy.’

Informed that the working group had finished its work, the Ambassador responded via email: ‘Please could you remind me whether any Lydian nominees were included [in the working group]?’

Responding to openDemocracy, a Foreign Office spokesperson said: “British Embassies play a positive role in helping to grow business around the world for UK companies.”

Keeping an eye on activists


The Embassy releases include monitoring of Facebook posts and public activities by members of the Armenian Environmental Front (AEF), an organisation which has helped lead public resistance to the Amulsar mining project.

For instance, after prime minister Pashinyan made a speech on changing Armenia’s economic dependence on mining and agriculture in September 2018, Levon Galstyan, a member of the Armenian Environmental Front, was reported in the Embassy monitoring as writing on Facebook that ‘Armenia will no longer be heavily dependent on [its] mining sector.’

Posts containing negative opinions about the British Embassy were also reported back to the Ambassador, such as when a member of AEF, Arpine Galfayan, wrote on Facebook that the ‘Ambassadors of the United States and the United Kingdom continue to exert pressure on the Government on Amulsar’.

“Learning that the embassy of a supposedly democratic country is following and collecting facts on us in order to serve certain business interests is frustrating, surprising and beyond any acceptable boundary,” said Levon Galstyan in reaction to the Freedom of Information releases.

Anna Shahnazaryan, a member of AEF, told openDemocracy that the British Embassy monitoring ‘resembled some kind of surveillance operation’ after she made a request for her personal data to the Foreign Office.

“The response showed how closely the Embassy collected information on my every action, word spoken and even my tone of voice when I spoke about the Amulsar case in public,” Shahnazaryan said, noting the ‘high frequency’ of Embassy emails concerning her statements at protests, meetings and actions during visits to international institutions in 2018 and 2019.

“It may appear that my data was collected from open sources, however there are details which show that special efforts were taken to analyse my behaviour beyond publicly available information,” Shahnazaryan continued.

“How did the Embassy use this meticulous collection of my personal data? Did the Embassy use it in their discussions with the Armenian government, for example?”

Past crises


At the official level, the UK has supported Lydian International through previous impasses with the Armenian authorities – albeit those under the guiding hand of the Republican Party, which was pushed out of power in 2018 after years of accusations of authoritarian tactics, corruption and vote rigging.

Notably, in 2012 and 2013, Lydian ‘experienced challenges’, as described in its filings, over environmental permits after the Armenian government redrew the catchment area of Lake Sevan, the country’s largest freshwater source, and updated the lake’s impact zone. A government resolution in July 2013, for example, expanded the Sevan catchment basin 3,000 metres either side of a tunnel which runs through the Amulsar project area. With mineral processing not permitted in this area, this move excluded the proposed site for Lydian’s heap leach facility, where cyanide is used to extract precious metals from ore, as Amulsar is located near Lake Sevan and connected waterways.

“This was the first time it became apparent that the Armenian government, or the powers-that-be, had gotten crossways with the company,” said Mickey Fulp, a mining analyst who runs the website MercernaryGeologist.com and has followed Lydian since 2009.

In a press release following the July 2013 government resolution, Lydian stated that the Lake Sevan amendment would potentially affect permitting and ‘almost certainly result in a delay to the delivery and publication’ of its Feasibility Study – a key report on the economic viability of the project used to attract investment for mine construction – and delivery of the Amulsar project as a whole.

The British Embassy, according to a list of meetings released under Freedom of Information, had a series of contacts with Lydian over the Lake Sevan amendments in summer 2013. For example, in an email to Lydian, an Embassy official promised to raise the issue with Armenian president Serzh Sargsyan, who last year was charged with theft of state funds.

‘It would be good if you could send me the most essential/pertinent bullet points,’ the Embassy email to Lydian, dated 6 June 2013 and released under Freedom of Information, reads. ‘<REDACTED> has a meeting with the President tomorrow and we can use this as an opportunity to highlight your issues with regards to the delay, but want to make sure that we focus on the most pressing points.’

According to email records released under FOI, in July 2013 the Foreign Office and British Ambassador contacted the Armenian government regarding the State Water Committee two days before the body recommended the extension of the Lake Sevan catchment basin, therefore excluding Lydian’s proposed HLF site. A week later, FOI records show that the British Ambassador once again contacted the government regarding the State Water Committee the day before the Armenian government put this recommendation into law. After the Armenian government chose to push ahead with the boundary change, an official working group involving company and government representatives was set up to identify a new heap leach site. The emails show that on one occasion the Embassy received detailed information about the proceedings of the working group. A heap leach site was agreed in October 2013. Environmental activists subsequently wrote an open letter to the UK Foreign Office, calling for an investigation into UK ambassadors’ support for the Amulsar project.

In the letter, the Save Teghut initiative claimed that UK ambassadors ‘continuously exert pressure on the Government of Armenia’ in support of Lydian International. The letter, written by future mining inspection head Artur Grigoryan, highlighted that British Ambassador Katherine Leach met Armenia’s Minister of Nature Protection a week after the government’s decision to extend the catchment area ‘with a special request’ to support Lydian. The next day, Ambassador Leach visited the Amulsar site, saying ‘as a UK-based company, Lydian International represents potentially the largest British investment in Armenia’. Responding to the letter at the time, the FCO said that it ‘standard and accepted practice for the British Government and its diplomatic missions to encourage trade and investment opportunities overseas.’

What next


In an effort to assist in cleaning up Armenia’s mining industry, the UK, among others, has supported the country’s path towards membership in the Extractive Industries Transparency Initiative (EITI). The latter is a global standards organisation aimed at increasing transparency and accountability in the natural resource business – and Lydian International is considered an important project for Armenia’s EITI candidacy and a drive towards responsible mining.

In May this year, members of affected communities in nearby spa town Jermuk filed a new complaint to project funder EBRD, claiming that public consultations had not been properly held during the development phase, and that the town’s tourism reputation had been affected by the mining project. The complaint also stated that residents had already witnessed environmental impacts such as dust and water pollution. But the two-year blockade, as well as what the company calls ‘duplicative and unnecessary environmental audits and investigations’ in Canadian court filings, has prevented Lydian from completing construction at the Amulsar mine, which is 75% complete. As a result, Lydian threatened Armenia with a potential international arbitration suit over the situation in March 2019.

After Lydian’s forbearance agreements were discontinued by its creditors in December 2019, the company applied for court-protected restructuring in Canada. Court filings in Ontario state that the company has been looking for sale, finance and arbitration options, though these have been so far unsuccessful. A motion filed in June 2020 states that Lydian will now undergo a restructuring process, with company creditors – resource investment funds Orion Resource Partners, Osisko Mining and Resource Capital Fund – to take control of the restructured company.

Source: opendemocracy.net





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