Finance Minister Vahe Hovannisian said on Wednesday that the government hopes mining operations at the Amulsar gold deposit will start by the middle of next year. They are important for continued economic growth in the country, he told a news conference.
The former Armenian government had granted the company now called Lydian Canada Ventures a license to develop the massive deposit in 2016. Lydian planned to start mining operations there in late 2018 and annually produce 210,000 ounces of gold worth $550 million at current international prices.
However, those plans were put on hold after several dozen environmental protesters blocked all roads leading to Amulsar following the “velvet revolution” that brought Pashinian to power in May 2018. They said that the project would wreak havoc on the environment. Lydian dismissed those claims, saying that it would use modern technology that would prevent such damage.
Pashinian’s government did not revoke Lydian’s mining licenses. But it also refrained from using force to end the blockade.
Armenia - Protesters block a road leading to the Amulsar mine, July 2, 2018.
The company, which claims to have invested $460 million in the project before the blockade, filed for bankruptcy protection in Canada in 2019 before being restructured. It is now owned by two U.S. and Canadian equity firms specializing in mining.
Following the disastrous 2020 war in Nagorno-Karabakh, the government began negotiating with Lydian in an effort to help revive what would be one of the biggest ever foreign investment projects in Armenia’s history. In a memorandum signed with then Economy Minister Vahan Kerobian in February 2023, the U.S. and Canadian investors offered the government a 12.5 percent stake in the mining operation in return for its pledge to manage their risks. The lavish donation has still not been formalized and completed, however, with the government dragging its feet over the uncertain future of the project.
Lydian’s Armenian subsidiary says on its website that it needs $200 million to finish the construction of mining and smelting facilities at Amulsar. The 2023 memorandum envisaged that the company will borrow $100 million of that sum from the Eurasian Development Bank (EDB) majority-owned by Russia and Kazakhstan.
However, the EDB chairman, Nikolay Podguzov, announced on December 5, that Lydian’s “funding application has been withdrawn.” “We are therefore not participating [in the Amulsar project] at the moment,” he said.
Armenia - Economy Minister Vahan Kerobian (center) shakes hands with representatives of Lydian Canada Ventures and the Eurasian Development Bank, February 22, 2023.
Lydian has refused to comment on the development. Economy Minister Gevorg Papoyan revealed on December 12 that it is now negotiating with unnamed Armenian banks on the provision of $150 million in loans.
Hovannisian said, for his part, that the company has asked the government to guarantee the repayment of the loans sought by it. The Armenian Finance Ministry is now looking into a “package of documents” submitted by it, the finance minister added, according to the Armenpress news agency.
Lydian, which seems to have trouble attracting the necessary investments in international financial markets, has also declined to give possible dates for the relaunch of the project. It says that the Amulsar mine would employ about a thousand people and pay at least $60 million in taxes annually.
No other large-scale Western investment projects are known to have been implemented in Armenia during Pashinian’s rule. Furthermore, his government is now facing massive lawsuits by a number of foreign investors who have done business in the country. They include some of Lydian’s current or former American shareholders.