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Amulsar: Myths and Reality

Lydian Armenia Senior Manager on Sustainability Speaks About Myths and Reality in Amulsar. Article was initially published on AMCHAM website.

Armen Stepanyan
Senior Manager on Sustainable Development, Lydian Armenia CJSC
Doctor of Engineering in Geo-Ecology

In an article several months ago I highlighted the myths about mining industry in general. Today I want to focus on Amulsar specifically and separate myths from concerns. Many questions voiced have been addressed continuously for years by different means of communications and those constituencies that had valid concerns have been satisfied by the answers. By this said, I do not want to imply that there should not be any further questions. They are welcome and any further concerns will be addressed properly. However when the same unfounded claims, that received comprehensive answers, still continue to be circulated, they stop being concerns and turn into myths. During these years the myths were so many and they changed so rapidly that it is impossible to fit them all into one article. Some of them were gradually abandoned by the authors themselves. Some are still in circulation and I would like to highlight several of those. 

Myth 1.  Amulsar project will inevitably pollute everything around. The company says nothing about the risks. 

Reality: No modern mining project if planned, designed and operated right will “inevitably pollute everything around”. Today a mine is permitted in the UK Right in a National Park. Examples are many. It is possible to operate a mine that will not have discharges polluting the environment. That is how Amulsar is designed. Undoubtedly, mining has large environmental footprint. Just like any big scale project, such as urban development. Even seemingly harmless projects like ski or beach resorts or a large agricultural development mean a huge impact on the natural landscape or on bio-diversity and if not managed right may cause pollution and degradation of soil and water resources. It all comes down to minimizing the environmental footprint and preventing the pollution by using safe and modern technologies, application of mitigation measures and finally proper closure and rehabilitation. If that is possible today in hundreds of mines all over the world, it is possible to do in Armenia as well.

As for the “company says nothing about the risks”. The impact assessment ONLY constitutes around 500 pages in the Amulsar ESIA and without shying away I can state that unprecedented for Armenia amount of work has been carried out to identify, assess and offer mitigation measures to possible risks. We are ready and open for discussion around the mitigation measures but I would very much expect that the discussion doesn’t start with “the company says nothing…” it undermines the thorough work of several dozen world-class scientists and may hardly be a start for a professional discussion.    

Myth 2. The mine will pollute Lake Sevan. It is in Sevan catchment area- thus illegal.

Reality: It will not pollute Sevan and the project does not contradict the Law on Sevan. From legal point of view, the location of the ore processing facility is outside the Lake Sevan immediate impact zone as the law requires. Respective government decrees in 2012-2013 extended the immediate impact zone and the company had to move the previously designed and permitted location of the Heap Leach Facility. So the previous locations too were legal and tested for safety but due to changes in law had to be changed. From environmental point of view the heap leach facility, runoff from barren rock storage facility and the pits are designed, will be built and managed to ensure proper containment within these areas. Thus not only Sevan but all surrounding natural receptors- soil, water (including Arpa and Vorotan) and air will be strictly protected. Honestly, as an environmental scientist I think Sevan needs strict protection from everyday continuous pollution. But myths that a world-class modern mining operation with a closed cycle processing, 40 km away will pollute Sevan distracts from the possible debate around  the real issues of Sevan. 

Myth 3. Cyanide will inevitably spread around, stay there for decades, poison everything and it is forbidden in the developed world.

Reality: It will not spread around because design criteria provide for it to be managed right. It is not forbidden in the “developed world”. Additionally, just a brief information that any chemist will confirm: Cyanide does not have a long-lasting impact because of its high reactivity when it is exposed to air and sunlight. It is very unstable and reacts with the surroundings to form other compounds which are harmless. We have explained how cyanide works in the gold extraction process on many occasions and in different Q&As. I only want to wrap it up very briefly. Cyanide indeed is a toxic chemical used not only in mining but in dozens of other industries including cosmetics, pharmaceuticals, etc. Yes, if mismanaged it can cause harm. The immediate hazard- if it is not handled correctly- is to the people who are mishandling it – it does not last long in the environment. Just as in case of any other chemical used in any other industry, the safety is controlled by technology, by safety regulations and by the management of the facilities. Cyanide is used in hundreds of mines all over the world, including in North and South Americas and in Europe and as technologies improve so do the safety measures, including those that will be used in Amulsar. 

Myth 4. Amulsar ore is sulphide thus it will inevitably turn everything around into acidic pollution. The company is “silent” about this.  

Reality: Firstly: Amulsar ore is NOT sulphide it is oxide. Thus the ore body itself will not be generating acid. It only takes a couple of minutes to check this plain fact available online before a public statement. As for acid generation potential. Although, the ore body is not sulphide, there is some relatively small amount of naturally occurring sulphide in the mineral pyrites in the barren rock. Though the concentration of sulphur is not high in the barren rock, it will still be managed. Almost any mine in the world has this issue to a different extent and throughout these years the mining industry has developed a series of measures to control it. We have explained how it will be managed in Amulsar in a recent Q&A. To wrap it up- the acid rock generating material is present in small amounts and it is controllable as it is in hundreds of mines worldwide. So no, there will not be any acid contamination.

Interestingly, I have heard all kind of imaginary issues discussed for the last 5 years in the public domain and only last months the question of acid rock drainage possibility has been raised with a premise that we were hiding this “crucial” issue. Meanwhile the issue is thoroughly presented both in EIA and ESIA. We have discussed it in a documentary about the project shot back in 2013. So the information was, and is publicly available. Responses to some specific questions about how the acidity tests were done and more details on control measures are all available in the ESIA. I would appreciate if interested parties took time to read at least that part. 
Myth 5. The mine will inevitably destroy all flora and fauna kilometres around and the company says nothing about biodiversity issues. 

Reality: Again, I can state without shying away, that during the last 7 years the company together with its local and international consultants has conducted an unprecedented amount of work on baseline collection on biodiversity, spending several hundred thousand dollars.  The biodiversity impact section in the ESIA is more than 100 pages. Another 100 pages are devoted to biodiversity management and action plans of several million dollar projects to ensure preservation, impact mitigation and offset to reach no net loss. I can hardly think of any other sphere, where this amount of environmental protection measures are envisaged. Undoubtedly, mine infrastructure will take some of the natural habitat of some species, as will any infrastructure project, even agriculture. But if managed right, it is possible to ensure that the viable populations of rare species are preserved and that is what Amulsar will be aiming at. Just for preservation of one species of plant around 700,000 USD is allocated. I think that is quite descriptive of the level of meticulousness of our approach.   

Myth 6. Jermuk mineral springs will be destroyed.

Reality: No they will not. We have spent hundreds of thousand dollars and years to conduct all necessary studies to test if the mine will have any impact on Jermuk water. The brief information on why the Jermuk springs will not be impacted is available in the recent Q&A. The details- including the modelling, tests, scientific methods are available in the ESIA. Now, I would like to ask how much resources and time was put in the research “proving” that Jermuk water will be impacted? Where is it possible to see the scientific methods used? I have no intention to dismiss the natural emotional perception. We are always ready to address concerns. However, statements like “Jermuk waters will be destroyed” that are not backed by any scientific research do not add credibility to the debate. When the Company says Jermuk springs will not be impacted, the statement is backed by independent research, not emotions. And it would be beneficial for all of us if this was a firm principle for any debate, not only on Amulsar. 

Myth 7. The mine can’t be profitable with a grade of less than 1 gram per tonne. There are no mines with such low grade in the developed world. 

Reality: Interestingly during these years we have heard contradicting accusations sometimes from the same people- that the company is going to make super-profits and that the mine cannot be profitable. Neither statement is true. There are many mines in the world with the same range of grade (less than 1 gram per tonne) of gold in the ore. For example: Cripple Creek and Victor Mine in USA, Eagle Gold project, Canada, etc. Moreover, the average grade of gold worldwide today is about 0.8 grams per tonne and high-grade deposits left are very rare. With modern technologies, it is still profitable. However, there are also no surplus- profits for the company, as some insist. Especially in capital intensive greenfield projects.  According to ICMM report around over 70% of mining production value are operating and capital expenditures, wages and salaries- most of which is spent inside the country. Thus it is a careful balance between the profits for shareholders and benefits for the country. That is true for Amulsar as well.  

Myth 8. Everything is conspiracy- from the company management to where it is registered and how its share price works. 

Reality: Writer Dan Brown says: “Everyone loves conspiracies”. After all, in most cases they are more interesting than the facts. The thing is, sometimes conspiracy theorists start distorting plain facts to make them match the theories. For example, in 2013 a Lydian board member left the board, only several months after joining, due to being offered a job in public office. So he is not associated with the company in any way for 2 years. But up until now he is frequently mentioned as a board member in the Armenian media and on this “fact” conspiracy theories are built. It only takes a second to check the company website and see who actually IS on Lydian board. Lydian is a listed company and everything- the composition of the board and management, financial statements, and major shareholders is publicly available information, accessible online. So is the share price fluctuation and tones of financial analyses of the reasons for the fluctuations.

Or, the conspiracy theory insists- if a company is registered “offshore” it is done for avoiding paying taxes to Armenia and so that nobody can “find” the company. The facts are far less intriguing. Lydian is a resident company in Jersey, and its shares trade on the Toronto Stock Exchange. Lydian is registered and subject to the Jersey Financial Services Commission, which maintains publically accessible records. Likewise, Lydian is subject to the rules and regulations of the Toronto Stock Exchange and the Ontario Securities Commission, both of which require significant public disclosure of information.

Jersey is a convenient domicile for many corporations as it offers a more simplified tax regime to other countries such as the U.K, and Canada. However, this has nothing to do with the taxes to be paid in Armenia on the income expected to be generated by Amulsar. The mine license belongs to Lydian’s subsidiary Lydian Armenia, an Armenian legal entity. Lydian Armenia is completely subject to and will pay all taxes and royalties according to Armenian laws and regulations. This is not affected by where Lydian is based. Moreover, according to Armenian legislation even company foreign employees working in Armenia pay taxes in Armenia. Today, while Amulsar is not yet in operation, Lydian Armenia is already among 200 top taxpayers of Armenia. I think this is quite a telling fact already. In fact we expect to be among top 5 taxpayers in Armenia when the operation starts.

Paraphrasing Confucius: looking for a black cat in a dark room, when it is not there, is a waste of effort. Especially when there are plenty of black cats in the light rooms and it is beneficial for all of us to try to focus on those.

As a wrap-up. The emotions are understandable. Armenia is my country and I frequently have strong emotions when it comes to all kind of issues. But my background is science and I have huge respect towards facts.  We need to manage to transcend emotions and have an issue-based discussion, backed by facts. “You lie”, “No, you lie” is not the level of discussion where the problems may get solutions. And this refers not only to Amulsar and not only to mining. Personally I think Armenia is facing huge issues in environmental and social management and not only in mining. From the air quality to food security, from public transport safety to issues in mining and other industries, problems are endless. To tackle those, we all need to focus on facts. Myths eat up our time and resources on both sides. And I don’t think we have neither excess time nor resources to afford it.