Armenian Environmental Front Civic Initiative
Urgent Appeal to Investors, including among others
EBRD, ING Bank, SEK, EKN, CAT Financial, ABB, SANDVIK, Amber Capital, Orion Mining,
Ameria Bank, Resource Capital, WB IFC CAO
From Armenian Environmental Front
Yerevan, Armenia, 26/08/2019
We are a group of concerned Armenian citizens writing to you with a call of divestment from the Amulsar gold project offered to you by Lydian Corporation.
The history of Lydian Corporation’s interest in establishing an open pit mine in Amulsar is undoubtedly well known to you. As investors/creditors of this business project, you are recipients of thousands of signatures on the change.org petition platform to stop financing this project and should be informed that during the entirety of this process there has been ongoing opposition to the project on the grounds that the mine represents a dire threat to the health of local residents as well as to the regional environment. In addition, those opposed to the mine have repeatedly warned of the dire long-term adverse economic consequences as a result of the mine, leaving behind a region completely bereft of employment opportunities and an environment denuded of its flora and fauna. Perversely, residents will also be shackled with the multiple burdens of dealing with a pit scar, tailings dam and a barren rock storage facility. It is believed that gold mining in Amulsar will result in contamination of the underground water resources of the nearby spa town Jermuk, which has for many decades been used for medicinal purposes. Its location in the watershed of Lake Sevan is considered to be a pollution threat to the biggest freshwater reservoir in the region – Lake Sevan. These are generational burdens that will exist long after every living Armenian has long since departed this corporeal existence.
Noteworthy is the fact that the citizens of Jermuk, the largest affected community, were never consulted on the exploitation of the neighboring mine. Other communities, such as Gndevaz have expressed their opposition to the project since 2011 understanding rather well the consequences of mining for their fertile agricultural lands and their everlasting loss. In 2014 the local people applied to the complaint bodies of the investing financial institutions – the International Financial Corporation’s (IFC) and the European Bank of Reconstruction and Development (EBRD) to stop the support to the mine. The IFC Compliance Advisor’s Office (IFC ombudsman) found a number of instances of Lydian’s incompliance with IFC standards. Regardless of this, IFC divested from the project in 2017, while EBRD continued its participation in the mining project and did not consider the complaints. Since 2015 there have been several court cases against the mining project by the communities as well as environmental non-governmental organizations, these court suits are still ongoing.
Since June 2018, with the revived belief in the dominance of democratic values in the country, following the revolution, the residents surrounding Amulsar took the initiative in their hands and closed the road to the mine. From November of 2018, they have democratically collected petitions and adopted community council decisions against any metal mining in their areas.
In an attempt to have a full picture on the questions raised in the legal and scientific arenas both in Armenia and abroad that the requisite environmental and social impact assessments did not follow due process, the government of Armenia decided to contract organizations to complete a review of Lydian’s original EIA/ESIA. As part of a criminal case opened at the Investigative Committee of Armenia, ELARD (Lebanon) and TRC (USA) were contracted in January 2019.
In June 2019 ELARD-TRC provided a report Environmental and Social Impact Assessment Review: Independent 3rd Party Assessment of the Impacts on Water Resources and Geology, Biodiversity and Air Quality, which is staggering in its implications. ELARD-TRC has clearly demonstrated that the original ESIA is replete with omissions, inconsistencies, inaccuracies, false and fraudulent reporting and a host of other spurious inclusions which, totalled, can best be described as “unscientific”. To the question from the government "Taking into account the location of Amulsar mine, its geographical position, adjacent residential and health resort areas, can the exploitation of the mine with all of its processes of open pit mining, heap leaching and barren rock storage facility, be conclusively considered safe, and if not, what type of environmental damage can this result in?, ELARD-TRC response is the following: “The ESIA/EIA assessments are deficient and corresponding conclusions are unreliable. Accordingly, the question of whether exploitation of the ore deposit can conclusively be considered safe cannot be answered.” We invite you to read the report to verify the rather strong denunciation we just imparted.
The ELARD-TRC assessment commissioned by the Investigative Committee details page after page of inaccurate scientific processes, which indeed questions the expediency of the project. This is to prove that the Lydian commissioned IFC compliance audit reports (e.g. one by Knight Piésold) are only there to make projects bankable and do not follow due scientific verification and assessment.
The implications of the ELARD/TRC audit report for Investors/Creditors are quite significant. They can entail corporate and investor fraud, willful misleading of investors/creditors, deliberate cover-up of the true hazards and consequently more accurate costs of the mining project. In just one instance in the audit report, reviewers suggest that the mine closure length and costs are reduced from standard closure of at least 30 years to the current 5-year plan. That cuts the mine closure’s costs more than twice.
We understand that as business and financial entities, you are interested in making profit, however the aim of this letter is to warn you of your client’s fraudulent behaviour and that you share responsibility in potential consequences.
We urge you to divest from Lydian Corporation’s Amulsar Gold Project!
16:55 August 27, 2019