In April 2014 and July 2014, residents of Gndevaz and Jermuk communities together with several environmental NGOs in Armenia submitted two complaints to CAO with regard to IFC's investment in Lydian International Limited, a mining company sponsoring the exploration and planning exploitation of the Amulsar gold mining project. The complainants highlighted concerns about project impacts on the local water basins' quality, risks with uranium deposits near the mining sight, red-listed species and a local tourism center. Other issues raised included criticisms of the Environmental Impact Assessment (EIA) conducted and alleged violations of IFC’s Performance Standards and national regulations.
IFC has been involved in Amulsar mining project since 2007; it is a 7.9% shareholder of Lydian International and has invested over 13 million USD in multiple stages. Meanwhile, Lydian International is an offshore based company, registered in Jersey, Channel Islands in 2006. The company has no mining experience whatsoever. It intends doing its first ever project in Amulsar, Armenia, which is situated in a geologically complicated area and therefore, is prone to substantial environmental and social risks. Since 2008, Lydian International is registered in Toronto Stock Exchange; however, this adds little transparency to Lydian with regard to revealing information about its shareholders, as the overwhelming majority of them are intermediary stock management companies and no information about the real shareholders is available. Nevertheless, a recent investigation discovered connections among several stakeholders in Amulsar project which involve corruption and money laundry risks. Amulsar gold mining project is only planned for 10 years and it will face serious opposition in case it starts. An ongoing petition with nearly 3500 signatures demands to stop financing the project.
The new Environmental and Social Impact Assessment (ESIA) was commissioned by Lydian Armenia (Geoteam) and approved by the Ministry of Nature Protection of Armenia in April 2016. Currently, representatives of Gndevaz village community and 2 environmental NGOs are disputing in the Administrative Court of Armenia the approval of the ESIA by the relevant ministries of Armenia; they state that the government has approved the mining project without carrying out due legal procedures and without due expert analyses of the documents presented by Lydian Armenia. At the most recent court hearing (March 16, 2017), the plaintiffs demanded that a new environmental and social impact assessment be carried out by independent experts. The stance of the Armenian government and Lydian Armenia on this issue announced on the next hearing on April 18, 2017. Meanwhile, information is published about how Armenian government accommodated the national legislation specifically to create more favourable conditions for gold mining in Amulsar breaching environmental standards and ignoring other more effective economic options for the development of the region: animation 1 and animation 2 present abstracts from an investigatory film on this issue.
Hereby, we would like to present to the IFC the most concerning unmanageable risks connected with gold mining in Amulsar and factors which may lead to the failure of the project. We urge that IFC refrains from any involvement in this project.
Affecting water resources and the risk of acid drainage
Amulsar is a sulphide mine (also stated in Geoteam’s early mineral exploration documents), therefore the water flowing through sulphide rocks will turn into reactive acid water creating acid drainage. The open mine area will be exposed to snow, rain and artificial watering, the streams originating in the open mine area will flow over the surface of the stripped area and downstream the mountain and will penetrate deep into the ground. Amulsar mountain is formed of cracked volcanic rocks and there is no method or technology to stop the water from penetrating into these rocks and thus flowing further into the ground. The latter will not only erode the iron concrete construction of the Vorotan-Arpa water tunnel that is located in the immediate vicinity of the planned mining area, but will also infiltrate into the water flowing through the tunnel into Lake Sevan and will ultimately alter the lake’s chemical composition. Lake Sevan is a unique large fresh water reservoir and a strategic water resource from the entire region of South Caucasus. This risk is also confirmed by a fact that not far from the mining site, right on Amulsar’s slope there is a small natural pond of diluted acid.
Another risk for water resources is associated with Jermuk, a health resort town famous for its healing mineral waters, only 12 km away from the mine and not even included in the ESIA until 2016. Lydian excludes any negative impact of the mining activities on the mineral waters and insists that an isotope analysis confirmed that these waters have no physical connection to Amulsar’s hydrological systems. However, scientific data (source: Geomorphology of Armenian SSR, 1986, pp. 134-145) (source 1, source 2) states the opposite: in relatively recent geological past, this area was the paleochannel of the Arpa-Vorotan river basin. Vorotan river has been connected to the Arpa river basin, they were one river (upper pliocene-lower quaternary geological period). Vorotan river’s upper basin and Arpa river were separated after Amulsar’s lateral raise. This means that deep mineral and underground waters are still connected.
The ESIA has numerous other gaps regarding the assessment of impact on water resources. These gaps are mentioned in detail in the petition of 8 environmental NGOs to the government of Armenia, dated March 10, 2017 (available only in Armenian yet). The NGOs and their experts exposed a number of methodological errors in the ESIA, contradictory facts presented in different documents of Lydian and a lack of grounded expert assessment which should prevent such a project from being carried out.
2. Heap leaching with sodium cyanide
The usage of sodium cyanide for heap leaching (1000 tons annually) contains primary and secondary risks, which are often unmanageable and uncontrollable. Primary risks include fires in cyanide storehouses, accidents in technical structures, leaks of highly hazardous substances, natural disasters, terrorist and military actions, and other similar accidents with grave effects on people, as well as nature. Secondary risks have even more complex origins and their impacts may last forever. Ore containing gold and silver is crushed as a result of which all elements (or metal and non metal compounds) in the ore are separated. This substance is processed with water and cyanide mixture, and as a result of chemical reaction the gold is separated. However the reaction takes place not only between cyanide and gold but also between cyanide and other elements in the ore, including heavy metals, as a result of which nitrates and other chemical compounds are formed. There are many more heavy metals in the ore in Amulsar than gold, including cobalt, copper, iron, nickel, mercury, zinc, wolfram, bismuth, chromium, lead, as well as poisonous substances such as arsenic, selenium, tellurium, beryllium, cadmium, which will seriously pollute and threaten nature, ecosystem and humans health if they remain in the waste. Risks of pollution cannot be ignored in the case of Amulsar, because its territory is located in a seismic area, in a tectonically active and landslide zone. Even a few millimeters of ground movement annually will be enough to destabilize the protective layers and structures and to cause an ecological disaster in Vayots Dzor region. Similarly, risk exists in case of technical problems and leaks that may also occur in the heap leach facility that will be located on the shores of Arpa river and some 1000 meters away from Gndevaz village (case of Bellavista mine is well known for us to understand the risks). From year 5 of the project activity, Lydian plans to extract the remains of cyanide from the heap-leach water and release it to Arpa river; the same solution is planned in case of technical accidents. The company hides information about the fact that this water will contain not only cyanide but also a large number of heavy metals (see more details in the next point).
Another risk related to this topic is that sodium cyanide will be transported to the mining site by road (there is no railway there) which means that dozens of towns and villages on the way to Amulsar will be at risk in case of any accidents of leak of cyanide during its transportation to the mining site. Note, the cyanide route, transportation and handling have not been part of ESIA and have not been duly examined and approved.
3. Communities downstream Arpa river
The mining project contains risks towards communities living downstre...
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