After years of preparation, a U.S.-British company has started building a massive gold mine in Armenia that should significantly increase the country’s gold exports worth around $100 million last year.
The company, Lydian International, broke ground on Friday for the construction of its gold mining and smelting facilities at the Amulsar deposit in the southeastern Vayots Dzor province, in a ceremony attended by Prime Minister Hovik Abrahamian, other senior Armenian officials and Western diplomats.
“We will build a safe, environmentally sound and world-class mine that all of us will be proud of and will benefit from,” Howard Stevenson, Lydian’s chairman and chief executive, said in a speech.
“From day one we have fully supported the Amulsar project and we are sure it will be successfully implemented,” Abrahamian declared for his part. He said it will boost the Armenian mining industry and thus contribute to economic growth in the country.
In a statement, Lydian said it will hire more than 1,000 Armenian workers for the unfolding construction work which will cost it $370 million. The mine itself will employ 700 people, it said.
The company, which is registered in the British Channel Islands but headquartered in the U.S. state of Colorado, attracted most of the planned capital investments from U.S. equity firms late last year.
The International Finance Corporation (IFC) and the European Bank for Reconstruction and Development (EBRD) have also invested in the Amulsar project by buying minority stakes in Lydian.
“Extraction operations will start at the end of next year, and we will start to produce gold in the first quarter of 2018,” Stevenson told RFE/RL’s Armenian service (Azatutyun.am). He said the Amulsar gold mine will be the largest in the country.
According to government statistics, Armenia exported $97 million worth of gold last year. The figure was equivalent to 6.5 percent of overall Armenian exports in 2015.
Armenia - Gold mines at Sotk.
A Russian mining company, GeoProMining, currently accounts for the bulk of gold production in Armenia. It operates big gold mines at Sotk, eastern Armenia, and owns a gold processing plant in Ararat, a small town 50 kilometers southeast of Yerevan.
GeoProMining claims to have invested hundreds of millions of dollars since purchasing the Soviet-era facilities from an Indian firm in 2007. The Ararat plant was modernized by it in 2014.
After an 8 percent drop recorded in 2015, the international gold price has risen by over 22 percent since the beginning of this year. This may be one reason why exports of Armenian previous metals as well as refined diamonds and jewelry items nearly doubled, to $166 million, in the first half of 2016, according to the National Statistical Service.
Armenian environment protection groups are strongly opposed to the Amulsar project, saying that it poses a serious threat to the local ecosystem and livelihoods of farmers living in nearby villages. They have also argued that the mountainous mining site is located less than 20 kilometers from Jermuk, the country’s most famous spa resort.
Both Lydian and the Armenian government have sought to dispel these concerns, saying that the company will use advanced technology. “We are bringing a technology here that’s not being used in any other mine in the country,” said Stevenson. “It’s a technology that doesn’t produce tailings.”
“So we think that we will be able to show Armenia that this is a different -- more responsible and safer -- way to do mining,” added the Lydian chairman.
The IFC and the EBRD scrutinized the environmental impact of the mining project before agreeing to invest in it.
“We are well aware of concerns voiced by civil society organizations,” said Aida Sitdikova, a senior EBRD executive who also attended Friday’s ground-breaking ceremony. She insisted that Lydian has committed itself to meeting “the strictest environmental conditions” set by the EBRD.
The U.S. and British ambassadors to Armenia, Richard Mills and Judith Farnworth, sought to give credence to such assurances with their presence at the ceremony. In written comments circulated afterwards, Mills expressed confidence that Lydian “will continue to serve as an example of responsible mining, operating transparently in line with international environmental and social standards.”
The new mining operation will also “help strengthen the Armenian economy,” said the U.S. envoy.