Armenia gives surprise go-ahead to Amulsar, takes stake in lucrative gold mine

By Mark Dovich

In a surprise move, the Armenian government signed a $250 million memorandum of understanding Wednesday with the mining company Lydian Armenia, greenlighting operations at the long-stalled Amulsar mine. In return, Lydian ceded 12.5% of its shares in the gold mine to the Armenian government.

Economy Minister Vahan Kerobyan immediately hailed the deal, saying the government expects Amulsar to increase Armenia’s GDP by about 1%. “That is quite a high figure, and we have no right to refuse such an opportunity,” he told reporters.

Lydian itself says that the mine will create more than a thousand jobs and pour hundreds of millions of dollars in taxes and royalties into Armenia’s state coffers over a decade of planned operations.

The Amulsar project has a long and controversial history in Armenia, catching the government between the impulse to attract international investment and the need to answer to its citizens, who overwhelmingly oppose the mine, according to public opinion polling.

An environmentalist group called Amulsar Without a Mine pledged Wednesday to “reactivate our resources” to oppose the project and said it would publish an action plan “in the coming days.”

Lydian broke ground at Amulsar in 2016, but development was indefinitely suspended two years later when environmental activists and residents of nearby communities, emboldened by the change in the government after the Velvet Revolution, began staging blockades of the mine entrance.

The protesters raised concerns that acid drainage from the project would likely leak into major rivers nearby, including one that flows into Lake Sevan, Armenia’s largest source of freshwater. They also expressed discomfort about the planned use of highly toxic cyanide at the mine, which is located fewer than 10 miles away from the famed resort town of Jermuk.

Lydian repeatedly threatened to bring the case to international arbitrage if operations remained stalled, but never did so.

Shortly after taking office in 2018, Prime Minister Nikol Pashinyan charged a Lebanese consultancy with conducting an environmental impact assessment, but the group’s report proved inconclusive.

Meanwhile, Armenia’s Investigative Committee opened an investigation into allegations that officials at the Environment Ministry intentionally downplayed Amulsar’s potential environmental impact, but ended its investigation in 2021 after saying it could not find any evidence of criminal conduct.

Lydian Armenia is a subsidiary of Lydian Canada Ventures, which is, in turn, owned by Orion Mine Finance in the United States and Osisko Gold Royalties in Canada.

A 2021 investigation by openDemocracy found that the U.S. and UK governments extensively lobbied for the project to move forward, even as the Armenian government spent years withholding final approval of the mine.

Armenia has considerable deposits of copper, gold, and molybdenum, and the mining industry is one of the country’s biggest single sources of employment and government revenue.

Lydian’s cession of part of its stake in Amulsar is not the first time the Armenian government has taken shares in one of the country’s mines.

In 2021, a subsidiary of a Russian company ultimately controlled by oligarch Roman Trotsenko ceded a quarter of its shares in the Zangezur Copper-Molybdenum Combine, Armenia’s largest and most profitable mine, to the Armenian government in still-unclear circumstances. Armenian officials have repeatedly refused to comment on the matter.