Don’t Panic, or your guide to the Amulsar crisis

Don’t Panic, or your guide to the Amulsar crisis

The story of Amulsar gold mine prospect is a very complex and interesting one on many levels. Activists blocking the roads to Amulsar, blocking Lydian Armenia – a gold-mining company – from exploiting the gold prospect they heavily invested in. Lydian threatening legal action. The prime minister saying there’s 99.9% possibility that the mine will be launched. Activists and certain MPs, some, like Varazdat Karapetyan, claiming that “the law of moral right is above any other law, including the Constitution”. Eco-activists claiming that opening the mine will pollute Jermuk, including the hot springs and the Kechut reservoir, and through Kechut – lake Sevan, one of the most important freshwater reservoirs in the region. And that they won’t back down. Police clashing violently with protesters in front of the National Assembly and at the location of the prospect.
Seems like the End Times are upon us. Or are they?

Text : Bayandur Poghosyan  Photo : ecofront.org, wikipedia.org


A note on Armenia
Armenia is a small landlocked country in the Southern Caucasus region. The First Republic of Armenia declared independence after the collapse of the Russian Empire in 1918, in the years following the Armenian Genocide, and was incorporated in the Soviet Union in 1920 as Armenian Soviet Socialist Republic. In 1991, Armenia declared independence from the Soviet Union and became the Republic of Armenia of today.
Armenia borders Georgia on the North, Turkey on the West, Iran on the South, and Azerbaijan on the East.Georgia has a conflict with Russia, a major power-player in the region, regarding its occupation of Autonomous Republics of Abkhazia and South Ossetia in the aftermath of Russo-Georgian war of 2008.
The Armenian-Turkey border is closed since 1991, the situation complicated by Turkey’s denial of Armenian Genocide and its military and political support for Azerbaijan (more on that later). While Armenia and Turkey did see a thaw in their relationships in the 2000s, when the Zurich protocols were signed, the thaw was halted in later years.
Iran is another problematic country – with its long history of authoritarian practices and human rights abuses, and its ongoing conflict with the West.
As for Azerbaijan, the territorial dispute between the two countries grew into the Nagorno-Karabakh war which is not over yet and ceasefire violations – the most recent being July 12-16 clashes of this year – threatening to reignite hostilities and even an all-out active war.
Armenia does not have oil reserves, but it’s rich in reserves of fresh water and metal ore.
The top exports of Armenia are:
•    Copper Ore ($693M)
•    Gold ($344M)
•    Rolled Tobacco ($266M)
•    Ferroalloys ($196M)
•    Hard Liquor ($195M)
The top imports of Armenia are:
•    Petroleum Gas ($340M)
•    Refined Petroleum ($227M)
•    Diamonds ($175M)
•    Cars ($174M)
•    Broadcasting Equipment ($140M)
Mining is a major sector of Armenian economy, with ore concentrates and metals accounting for about half of the country’s exports.

 

Geoteam, Lydian and Lydian
To avoid confusion with naming, let us understand that currently we are dealing with two legal entities named Lydian: Lydian International ltd., a British mining corporation founded in 2005 with prospects in Armenia, Kosovo, Georgia, trading on the Canadian stock market as TSX:LYD, and Lydian Armenia, a mining company registered in Armenia, with Lydian International ltd. owning 100% of its shares.
Lydian International ltd. got financing from investors like the US-based Orion Mine Finance and Resource Capital Funds (around 325 mln. USD), with Resource Capital Funds owning 32% shares in the company at the time of this writing, Orion Mine Finance owning another 11.7%.
Dr. Armen Sakrissian, the current President of Armenia, was appointed as the president of Lydian International ltd., and claims to have resigned after three months of collaboration.
At this point in time, the Armenian part of Lydian International is operated by Dr. Hayk Aloyan.
Lydian International created an Armenian company named Geoteam CJSC in 2005 to carry out mineral exploration and mining operations in Armenia. In 2016 Geoteam CJSC was renamed to Lydian Armenia CJSC.

 

How did we get here?
The story of Amulsar is but another chapter in Armenia’s history of both irresponsible exploitation of natural resources and environmental action without solid scientific understanding of environmental science and economics by most involved. It’s a story of economic policies undermining the ecology of the country, and eco-activism bordering on economic sabotage.
To understand it, we have to go way back – 1910, to be exact, when an Armenian engineer named Sukias Manasserian published his book “The evaporating billionaire and the stagnation (lit. trans. “lakeification”) of Russian capital”, where he proposed to drain lake Sevan, the largest freshwater reservoir in Armenia and one of the largest high-altitude freshwater lakes in Eurasia, by 50 metres and use the water for irrigation and hydroelectric power. In truth he was echoing the sentiment of Aleksandr Voeikov – one of the most influential Russian climatologists – and the person often considered, through his influence on Soviet science, the architect of the decline of the Aral sea.
On the surface, Manasserian’s plan sounded reasonable: Sevan lake is divided into Major and Minor Sevan, with Major Sevan having much larger surface area yet being shallower than Minor Sevan. Manasserian calculated the amount of water evaporating from the surface of the lake, calculated how much money could be made if the evaporated water was used for irrigation and electricity. 
During the Stalinist era, the Soviet administration decided to bring Manasserian’s plan into action. The project was launched in 1933 – the riverbed of Hrazdan river was excavated, and a tunnel was dug 40 m. under the lake’s surface. The added water outflow was used to power the hydroelectric power plants of Sevan-Hrazdan Cascade, and to irrigate a large amount of land in the Ararat valley. The tunnel itself was finished in 1949, leading to the water level dropping at a rate of 1 metre per year.
And everyone lived happily ever after.
Except they didn’t.
It is important to understand how such massive projects create complex co-dependent systems deeply entrenched in the overall infrastructure of the country which makes them almost independent to halt or dismantle when something goes wrong.
And wrong it went.
Turned out Manasserian and his successors did not understand the complex ecology of large freshwater lakes like Sevan, and did not plan for the changes the lake would undergo once it lost a significant volume of water. Aeration and biodiversity changed dramatically, eutrophication of the lake became too fast for the lake’s self-purification mechanisms to deal with it. The water levels continued to drop rapidly until 1962, and over time it became evident that Manasserian’s idea had resulted in a disaster – eerily similar to Voeikov’s other legacy, the Aral sea.
In 1964 the Soviet administration decided to divert part of the water from the river Arpa into Sevan – the Arpa-Sevan tunnel, starting with the Kechut reservoir near the city of Jermuk, going 49 kilometers and connecting with Sevan near Artsvanist. In the 1970s the lake’s eutrophication caused its first algae bloom. In 1981 the Council of Ministers decided to accelerate the rise of the water level by diverting water from Vorotan river through the 21.6 km Vorotan-Arpa tunnel.
All these actions helped stabilize the situation of the lake, but led to other complex ecological changes – including, but not limited to invasive species that threatened the biodiversity of the lake – but that’s a story for another day.
In the context of our story, what happened to lake Sevan has two important impacts: it connected the water basins of lake Sevan and river Arpa, and made the Armenian public much more sensitive to ecological problems and more distrustful towards industrial projects.
The latter factor would severely undermine lake Sevan in the coming years.
Nobody could predict the perfect storm – the Chernobyl disaster of 1986 raising concerns over nuclear security, and the 1988 Spitak earthquake creating an all-out panic. The Karabakh movement and the overall socio-political destabilization of the region, with the prospect of independence from the USSR and the threat of full-scale war against Azerbaijan on the horizon.
An eco-activist movement started gaining traction in Armenia, protesting both against the chemical industry and the Metsamor Nuclear Power Plant.
Eventually, the movement achieved many of its goals – the closure of the Nairit PVA production plant in 1988 and of the Metsamor NPP in 1989. And the closure of Metsamor NPP caused the so-called “dark and cold days” of 1990s, increased the country’s reliance on petroleum products and the hydroelectric output of Sevan-Hrazdan cascade – the one I mentioned earlier – and the restoration of Sevan was set back by continued loss of water. The deterioration of Sevan was a major factor for people’s distrust in industry and technology; the said distrust caused Sevan to deteriorate further.

 

No, but really, how did we get here?
As mentioned earlier in our notes on Armenia, mining has long been a large part of Armenian industry – while Armenia does not have oil, unlike Azerbaijan, it has large reserves of gold, copper, molybdenum and multi-metal ores.
The Armenian government has also been notably accused of large-scale corruption and negligence, and a profitable sector like mining was not an exception.
Transparency International included Armenia’s case in its 2017 study of corruption in the mining industry.
In 2018 Fact Investigation Platform, an Armenian watchdog organization, published a research including drone footage of the Akhlata mine tailings leaking into the Debed river and polluting it, which is allegedly the result of criminal negligence during the construction of the dumping site.


On the opposite side of the spectrum, the eco-activist movement became increasingly more active after their 2011 victory against the hydroelectric power plant allegedly threatening the Trchkan waterfall. This was followed by the “Save Mashtots Park” movement, fighting against the occupation of a public park by shops and boutiques. After 90 days of peaceful protests and police violence, the Mashtots Park movement was successful too.
After Mashtots Park, the civic and eco-activist movements had a few setbacks – protests following the allegations of electoral fraud weren’t successful enough to topple Serj Sarkissian’s regime, the Covered Market of Yerevan was converted into a part of the Yerevan City supermarket chain, controlled by a state-backed oligarch.
It was also a time when the civic and eco-activist movements had a schism, with a large group of activists forming the Armenian Ecological Front, an organization allegedly aligned with Pre-Parliament – a radical opposition political group that was a side in the 2016 Yerevan hostage crisis.
The Armenian eco-activist movement actively targeted the mining industry as a major pollutant of the environment – including the Kajaran copper-molybdenum open-pit mine, the Sotk gold mine, and most importantly the Teghut copper-molybdenum prospect, which was set to be exploited by Vallex group.
The fight against the Teghut prospect was something the eco-activist movement was building up to, and when the construction of the mine began in 2007, it was a bitter defeat. Only in 2018 the exploitation of the mine was halted amid concerns for environmental pollution, with operations resuming in 2019.
Aren Mkrtchyan, a member of Armenian Parliament, commented to Azatutyun: “I want to emphasize, that the way the mining industry was in Teghut – which caused a social and ecological disaster – is unacceptable to us, and the Government will take upon itself to watch the relaunching of the mine. I hope and am sure that there will be completely new approaches and a new quality of mining industry here.”
Allegedly one of the major factors of the Save Teghut movement was the fact that the local villagers actually supported the construction of the mine – the economically challenged rural community was attracted by promises of work and investments.
Geoteam CJSC, a company owned by the British Lydian International ltd., had started mineral exploration in Amulsar in 2005, which had attracted the attention of the eco-activists.
Amulsar does not seem like a good location for a mine: it’s located midway between the Kechut and Spandaryan water reservoirs, around 8.5 km from each, and 10 km from Herher State Sanctuary.
The city of Jermuk and the Jermuk mineral water sources are located next to Kechut reservoir. And Kechut reservoir is the entry point for the Arpa-Sevan tunnel, connecting the water basins of Sevan and Arpa river.
The Jermuk mineral water and the bottling plant are important to mention, as it’s here that Lydian and Geoteam stepped not only on the toes of eco-activists, but also a very rich and powerful man – the former mayor of Jermuk, former member of Parliament Republican Party – the ruling party until the 2018 Velvet Revolution – and the owner of Jermuk Group – Ashot Arsenyan.
While the local villages had cooperated with Geoteam and Lydian, and even protested a few first visits by eco-activists, the latter had learned their lesson in Teghut and weren’t willing to take the same chances. Thus a PR-war began between the eco-activists, allegedly backed by a local Armenian oligarch, and Lydian International, a foreign company.
The Lydian narrative was that their industry was up to the international standards and would not threaten the affected regions. Which wasn’t anything other mining companies hadn’t promised.
The eco-activist movement preached doomsday scenarios for Sevan, Jermul and all of Armenia if the Amulsar prospect was exploited.
For full disclosure, I had been a member of the eco-activist movement since Masthots Park, and the 2012 anti-Lydian protests in Jermuk became the breaking point for me.
I noticed one of the more notable activists telling the villagers that gold mine was only a front for an uranium mine – and when I expressed confusion, I was pulled to the side and told that uranium wasn’t the true issue – the mine tailings were, but uranium was much more effective at scaring villagers.
When I returned to Yerevan, my faith in us activists being “the good guys” was shaken. This, and collaboration with a representative of the regime, would mean one of two things, or maybe both: either the threat was serious enough for the people I knew and trusted to sacrifice their integrity to it, or this was an issue of principle, a payback for Teghut. In either case, both sides weren’t beyond bending the truth to push their agenda. It had become a war – victory at all costs, and neither side was going to be trustworthy.

 

Different perspectives
From a certain perspective, the story of the Amulsar mine plays out like an ancient Greek tragedy. There’s the tragic hero – the eco-activist movement, hunted and haunted, with its share of adventure, triumph, failings and its fatal flaw. This story has its villains – the system that cares only about the enrichment of certain individuals, the predatory world of venture capitalism, the local people who can be coerced into cooperating with the mining companies for a promise of work and investments in the regional infrastructure. People who just won’t listen to the cries of Mother Nature.
From another perspective, this is a story of social struggle, people trying to stand up for themselves against the oppression of capitalism, the global financial system, the story of self-determination and struggle for self-governance. A fight against evil central government. Quite a heroic tale, if you’re into this stuff.


There’s also the perspective of an international mining corporation finding a profitable gold prospect in a developing country with suitably lax mining legislature, coming to agreements, making investments and then facing roadblocks in the form of anti-mining activism, change of government and other misfortunes. A corporation that has made promises – which hold legal weight – to its investors, creditors, partners. They want to be seen as a respectable, responsible enterprise, which understands the risks and responsibilities associated with mining.
There’s also the perspective of a struggling country that suffers from corruption, political strife, is blockaded by two of its four neighbors, the third one is in conflict with its main economic and political partner and the fourth one is subject to international sanctions, with growing unemployment and poverty, and with mining being arguably its largest single export.
And there’s the perspective of a political party – My Step – that came to power backed by all the groups who were dissatisfied by the actions of the previous government – including the anti-mining activists – and is now torn between the legal obligations inherited from their predecessors and the often uncompromising activist groups.
Each perspective has its own narrative. Each narrative has endings with “win” and “lose” conditions.
The “win” condition for eco-activists can be summarized in their slogan – “Jermuk shall never become a mine”. The “lose” condition of the narrative, the doomsday scenario is if the mine is opened, the toxic waste from the mine pollutes water sources and gets into lake Sevan through the Arpa-Sevan tunnel, and Armenia loses most of its fresh water. There are also concerns for Jermuk’s springs and tourism, the health of the surrounding populace and so on.
Lydian Armenia has its own doomsday scenario. It was created specifically to exploit the Amulsar gold prospect. If the mining deal falls apart, the company will be forced to liquidate its assets and sue the government of RA for damages as per local and international law. A win scenario sees the company resume its mining operations.
The scenarios for the current government are even bleaker. It’s an either-or scenario. Either they support the eco-activists and revoke Lydian Armenia’s right to mine the Amulsar prospect, or support Lydian Armenia’s claim and face rabid opposition from hardline eco-activists and their supporters.
Before the Velvet Revolution which saw the ruling Republican Party replaced with the opposition, negotiating with Lydian and enforcing tighter safeties around the mine was not viewed as a possibility. Paradoxically enough, eco-activists don’t seem to view it as a possibility to this day.
The supporters of each narrative see only facts supporting theirs, and interpret facts to fit into their narrative. High cancer mortality rates in Armenia? Mining industry is to blame, the eco-activists will say. They won’t talk about the incidence of cancer, or that life expectancy after a cancer diagnosis is 30% lower in Armenia than the world average, with people are most often diagnosed with cancer on 3rd and 4th stages when treatment is less effective. About a fourth of the population lives under the poverty line. Cancer treatments are often beyond the financial ability of an average Armenian and funded through public fund-raisers and charity. Low trust and corruption of the healthcare system. Asbestos-lined roofs inherited from the Soviet era. Air pollution, particularly by partially burned carbohydrates from the Yerevan Thermal Energy Plant. Smoking.
Jermuk mineral water, promoted as being beneficial for health, could be a part of the cancer debate too. It’s the most popular sparkling water in Armenia and the one Amulsar mine is threatening, if we trust its critics. Khachik Stamboltsyan – an eco-activist from the 1980s – claimed exports of Jermuk could sustain Armenian economy and be an alternative to mining.
Except in 2007 the FDA issued a warning that arsenic levels (a substance known to cause cancer in humans) in Jermuk imported to Pennsylvania were more than 5300% above safe levels. In 2017 the FDA sampled Jermuk in California – finding arsenic levels 4500% above the safe maximum.
How did Jermuk Group react? With an interesting statement. “This is intentional and directed against the mineral waters of Armenia. Jermuk mineral water isn’t the property of the “Mother” plant or Jermuk group, but the property of Armenia, as it flows from its depths. This is a transgression against the property of Armenia.”
Did this lead to boycotts and protests, investigations, pausing the production of the mineral water? Not really. You see, Jermuk is a valuable location in the country’s underdeveloped tourism infrastructure and most eco-activists see tourism as an alternative to the mining industry. They need that alternative to counterbalance the economic impact of mining, and they aren’t going to cut the branch they are sitting on, even if that means potential arsenic exposure for people who come to Jermuk’s resorts.
On the other hand, seemingly eco-activist pages started popping out on social media, like “Green & Clear”. Those were supporting Lydian Armenia’s agenda and led a smear campaign against major eco-activists and other associated people, including yours truly (who was accused of being the co-owner of Panarmenian Media Group, one of the largest media holdings in Armenia, and I truly wish I was that rich and powerful). One could only assume those were guerilla tactics employed by Lydian Armenia’s PR team. 

 

Mostly harmless
After Armenia’s “Velvet Revolution” the eco-activists who took an active part in the change of the regime expected the government to be supportive of their agenda. A prominent eco-activist – Arthur Grigoryan – was appointed head of Inspectorate for Nature Protection and Mineral Resources.
The Investigative Committee of RA started a criminal case to investigate the alleged willful concealing of information about pollution of the environment, related to the exploitation of Amulsar gold mine.
A quick search in Datalex.am, the online database for court cases in Armenia, shows that Lydian was involved in extensive litigation against various Armenian government bodies (most notably, administrative cases against the State Revenue Committee, the Ministry of Economy and the Police of RA) to various success, many of the cases pertaining to the inaction of the police when Lydian demanded to remove invaders from their property. There is also litigation against eco-activists, almost exclusively accusing them of slander, but those cases are less successful and some are ongoing to this day.
And then strange things started to happen. Arthur Grigoryan’s Inspectorate declared that an endangered species of the Apollo butterfly had been discovered on Amulsar. Vice-PM Tigran Avinyan later declared that further research had shown that the Apollo butterfly does not live at that altitude.
Arthur Grigoryan was removed from his post and made statements claiming that his dismissal was under Lydian’s pressure. Then he claimed his removal was connected to the illegal whitefish (siga) business of lake Sevan. At some point, RA prime minister Nikol Pashinyan made a statement claiming Arthur was fired because of “severe incompetence”.


On March 11th, 2019 Lydian International formally notified Armenia of disputes with its government under the country's investment promotion and protection treaties with the UK and Canada, in connection with the ongoing blockades of road access to the Amulsar Gold Project. The statement released by the company also warned, that “under the UK BIT [bilateral investment treaty], Lydian UK may submit the dispute to international arbitration three months after such formal notification, and under the Canada BIT, Lydian Canada can do so after six months”.
The Investigative Committee funded an expensive review of Lydian’s Environmental and Social Impact Assessment (ESIA) and Environmental Impact Assessment (EIA) by an independent firm – Earth Link and Resource Development (ELARD).
ELARD finished its review on July 22nd, 2019, and presented it to the Investigative Committee on August 7th. On August 14th it was made publicly available. Many people read it and… didn’t know what to make of it.
While the Investigative Committee found that the review provided no basis to be used in the criminal case on willful concealing of information about pollution of the environment, the review contained worrying data on the flaws and incompleteness of ESIA/EIA documents provided by Lydian Armenia. It also recommended additional measures to control the risks presented by the findings.
The government made a statement that the new risks were controllable, and that they would oversee their enforcement.
You should keep in mind that Lydian Armenia’s operations had been halted. Not by court decision, but by activists blocking the road to the mining site. And the government did not interfere, as seen in the court cases against the RA Police.
You can imagine the impact of the report on society and especially on social networks – it is a predictable process, when a large amount of highly specialized information is dumped on the general populace. People started talking of acid drainage, water pollution, the review was both quoted and discredited by representatives of the same sides of the debate. It was reinterpreted and fitted into each existing narrative. Without providing any constructive input, it was turned into fuel for the dumpster fire the Amulsar public debate had deteriorated into.
Most recently, even if the ongoing COVID-19 pandemic had slowed down developments, another series of incidents happened, very descriptive of the ongoing conflict.
Lydian had demanded that two trailers used by the activists to monitor and blockade the prospect, were removed from their property. The Administrative Court decided the case in Lydian’s favor (ՎԴ/9786/05/18). Thing is, Lydian had provided specific coordinates for the trailer houses, and the Jermuk Police and the local administration declared the points did not represent their accurate locations. In response, on June 30th, 2020, Lydian’s armed guards reportedly invaded the area guarded by activists, ran over their three puppies and started patrolling the area. In July, Lydian declared it had received the results of an examination of the area proving that the trailer houses were on their land, and on August 4th they announced they had removed those from their land.
The eco-activists called for a nation-wide mobilization, which led to a potentially explosive standoff with the occasional scuffle (which included the police chief of Armenia being assaulted by Lydian guards, being arrested by the police, several activists arrested and claiming police brutality, and so on).

 

What to make of this
If you want my honest opinion, I don’t know. Everybody lies, everybody bends the truth, everybody fits everything into their own narrative. From a certain point of view, this article is a narrative in itself, even if unintentionally. It is impossible to represent every fact, every point of view without writing tomes on the topic.
Ara Ghazaryan, a lawyer unaffiliated with any side, has given a long interview representing the legal side of the problem. He claims this is essentially a trade dispute between a private company and the Republic of Armenia, which is forcefully made into a political dispute. He claims the problems began when the government compromised with the eco-activists and did not pursue the rule of law.
Except a representative of the legislative power, a PM, a member of the ruling party Varazdat Karapetyan claimed that there’s a right above formal law, and even the constitution: “the right of natural morals”. This is a sentiment echoed by many activists.
The government claims the risks of the Amulsar mine are controllable. “Mostly harmless”.
And there are members of the extra-parliamentary “Citizen’s Decision” party who see this as a dispute that should be solved in the context of direct democracy, even if there is no legal procedure for that.
And there are people in the eco-activist movement who claim that opening the mine would be the end of Armenia, and that every method is justified to fight against the mine.
In the end, we can know several things for sure: angry mobs are still influential in Armenian politics (the fight against the Istanbul convention is another example), and that widespread government corruption and lax mining regulations have directly caused this crisis.
The tragedy is – the government has changed, and corruption is on the decline. But the obligations made by the previous regime are still in effect.
On one side, the government is accountable to the public, and the mining industry is accountable to the government, and the eco-activist movement is so decentralized it is not generally accountable to anyone at all.
So who should you believe? Make your own opinion. Because this is a serious question, and whichever answer you find, whichever choice you make, you should be ready to bear the consequences.
On one hand, the alleged potentially catastrophic damage to the environment. On the other – the very real risk of Armenia being successfully sued for damages, loss of trust by international investors, more poverty and economic decline. Proponents of both scenarios claim their case will affect thousands of people, both say the other scenario is avoidable.
You might think a reasonable compromise would be the solution, but no side seems interested in such a compromise, and even talking of it among the eco-activist community would likely get you branded as someone on Lydian’s payroll.
And as time goes on, the viability of the Amulsar prospect for sustainable mining practices dwindles, as the losses of Lydian International mount up.
As I said in the beginning, the story of the Amulsar gold mine prospect is a very complex and interesting one. And anyone proposing a simple solution is likely either mistaken or lying.
 

Related Articles