Dr. Gayane Novikova
October 11, 2019
I have never considered myself as a person who can contribute to the discussion on energy, ecology, mining, and other similar issues. However, almost always there is a direct and strong connection between energy/ ecology issues and the ruling elites on the one hand, and the complex dynamic between the ruling elite and the opposition, on the other. And because this theme is closer to my interests, I gladly answered Margarita’s suggestion to add another dimension to today’s discussion.
Since 1988, Armenia has had several waves of ecology-based movements, which — to different degree — have been challenging for the ruling elite, The current circle is related to the controversial developments around an exploitation of the Amulsar Gold Mine (the term of operation is 10 years; according to evaluations, it has 73 tons of gold and 294 tons of silver). However, there are significant differences between the earlier cases and the one now in progress.
A few preliminary remarks:
- Armenia has very limited natural resources, nonetheless, its soil is rich in iron, copper, molybdenum, lead, zinc, gold, silver, antimony, aluminum.
- According to the Armenian Development Agency, more than 670 mines of solid minerals, including 30 metal mines, with confirmed resources, are currently registered in the state inventory of mineral resources. Among these around 400 mines, including 22 metal mines, are under operation. Among metal minerals there are 7 copper-molybdenum mines, 4 copper mines, 14 gold and gold-polymetallic mines, 2 polymetallic mines, 2 iron ore mines and 1 aluminum mine.
- Just to give you an idea of the scope of the developments in the mining sector, let me mention that in 2005, 17 mining and metallurgical enterprises were in operation; the largest enterprises mined copper and molybdenum ore or extracted gold from tailings. Ore concentrates and metals are the state’s most important export products (the first is a diamond cutting industry that is based on imported raw materials from Russia).
- Therefore, Armenia’s mining sector is a key contributor to the national economy. This means that any Armenian government is eager to keep it operating and, probably, even to enlarge it. In the meantime:
a) The mining (together with the construction industry) was and is a great source of corruption. All previous Armenian governments were selling the mines to international (mainly, offshore) companies and were taking all necessary steps to hide the actual ownership — quite often the owners of the mines were family members of representatives of the ruling elite. (Kocharyan court case — corruption /bribe $3 million)
b) The mining industry is extremely dangerous for health. In the areas of intensive mining the population is suffering from lung diseases, and different types of cancer and allergies.
c) Another negative factor is a stage of ecology: Armenia faces the direct danger of complete deforestation and growing desertification.
d) There are serious concerns about the water level and water condition in lake Sevan, and several rivers.
All of these listed factors are urgent issues for the current ruling elite, that — factually — cannot address them without putting into question its legitimacy.
The Pashinyan team came to power as a result of multiple actions of civil disobedience and non-violent resistance in April-May, 2018. The snap parliamentary elections in December 2018, confirmed a high level of legitimacy of Pashinyan and his party, “My step”: the party holds 88 out of 132 mandates. The second in the Parliament is the Prosperous Armenia Party (with 26 MPs, which since the beginning of its establishment in 2004 was almost always pro-governmental). The smallest faction in the Parliament is Bright Armenia (17 mandates, not much power, but on certain occasions its members can demonstrate their strong disagreement with the ruling party’s activity). One MP presents himself as an independent.
The current structure of the parliament allows the ruling elite to ignore suggestions, proposals, complaints, and demands of the parliamentary opposition. Moreover, the modus operandi of the ruling elite in general is clear: the incumbent prime minister has strong mass support, and when (or if) something critical happens, the ruling party immediately appeals for popular support via rallies, the blocking of streets, etc.
However, owing to:
- Pashinyan’s personal ambitions and populist behavior, his willingness and intension to be personally in charge — for everything!;
- a lack of a strategic long-term vision;
- the slow crystallization of a growing resistance BY of a non-parliamentary opposition, which has still some public support;
- a, finally, growing disappointment among certain strata of the Pashinyan supporters, mainly because of the government’s overstating expectations and promises, —
any type of problematic issues can provoke a new wave of disobedience, this time — against the democratically elected government.
Now about the developments around the Amulsar Gold Mine. In addition to all above-mentioned factors, there is also a serious legal issue. The owner of the mine is Lydian Armenia, a daughter company of Lydian International, a British-American company established only because of Amulsar, and registered in Canada. The construction of its infrastructure started in August 2016, and was forcibly stopped by the local population in June 2018.
Some legal experts speculate that if this case proceeds to international arbitration, under the Investor-state Dispute Settlement (ISDS), Lydian International LTD could seek over $1 billion (some are mentioning $2 billion) in compensation from the Republic of Armenia, in order to recuperate its investment and lost potential earnings. This is a huge amount of money for the state, which has a GDP of around $12 billion. The experts also have mentioned that the ISDS mainly takes the side of the company, not the government.
Let us analyze, how the Amulsar case can influence post-Velvet revolution Armenia and where potential hidden threats and challenges lie.
First, the Armenian government — to successfully implement its promises, especially those in the social sphere, — needs a stable monetary flow; therefore it cannot ignore mining.
a) that actions of civil disobedience will continue, and probably will become broader through an involvement of those parts of the population who live near mines and are affected directly by the aftermath of mining. In particular, the population of the Vayots Dzor province (where the Amulsar is located) have been blocking the roads toward this ore deposit area since late June 2018.
b) the government puts at risk its legitimacy in case if its conflicts with certain segments of the population continue, and it will try to avoid a proper response. or just to ignore it. The worst case scenario will include an involvement of the police (until now, there have been only a few minor episodes).
Second, the government cannot ignore the consequences of a possible lawsuit, which
a) will cost a fortune, and there is no guarantee that the Armenian government will win in court; and
b) the lawsuit can damage an image of the New Armenia (this argument seems very important for the authorities) and put at risk the promised economic revolution. As Pashinyan stated: “We cannot afford to appear like a country which doesn’t respect contractual obligations.”
Third, the government has acknowledged that the ecological situation in Armenia is troubling. To address the concerns of the population, especially regarding the Amulsar, it ordered an independent risk assessment. The evaluation was provided by a Lebanese company Earth Link & Advanced Resources Development (ELARD). ELARD concluded that, according to the presented documents, the risks are low and can be fully controlled. However, the most important is that its conclusions were made without any field work. However, this conclusion allowed Prime Minister Pashinyan to make the following statement: “I am 99% sure that there is no risk for the ecology of the Republic of Armenia.” “If we see risks, we will tell to Lydian Armenia and will give it 30 days to fix the problems; otherwise we will close the mine.”
The International Federation of Human Rights (Paris) provided its concerns regarding the risks to the people and environment, measuring them as high.
Fourth: and here is the most intriguing part of this story:
According to several sources, going back to the late Soviet times, the Amulsar area is rich in Uranium and Thorium (195 tons). Therefore, Lidyan International needs to apply to the Armenian government to obtain special permission for the development of Uranium ore. As for now, neither the Armenian government nor Lydian International have mentioned a Uranium factor. However, some reliable Russian resources are talking. And I remember talks in Armenia in the mid-80s about large Uranium deposits.
And finally: the question to be answered is:
- Whether the current Armenian government will thoughtfully consider all pro and contras of this case
a) will move forward with a reopening of construction in April, 2020, and then support mining activity in Amulsar, or
b) it will seek popular support, will mobilize the population, and will try to convince the international community that the continued mine operation will be devastating to my small country.
Unfortunately, I don’t have an answer.
VALDAY TO WATCH https://www.youtube.com/watch?v=juXelPWcT2M