Protests at Amulsar Gold Mine Project have entered their sixth day and protesters have significantly escalated the situation, announcing that they are done negotiating and compromising, have no interest in explanations, and will only walk away when the mine is permanently shut down.

This comes a day after Prime Minister Nikol Pashinyan demanded that protests be stopped immediately, repeating the favorite statement of his administration, arguing that the new government is not corrupt, and does not have links to mining, and hence can be trusted to make an impartial decision for the nation. Implying that the previous government had any ties to the project does not have any evidence-based ties to reality. The only politician in Armenia linked to the project, current President Armen Sargsyan, was not a part of the previous government.

The protests are taking place due to concerns over the potential environmental effects of the mine. Protesters have chosen to use many of the strategies that brought about the recent governmental change such as blocking roads. This is the third shut down at Amulsar in recent weeks, after protesters shut down the mine for five days in mid-May, and then again for three days in early June. There had been no shut downs in the previous two years of construction.

These protests, the damage that has already been caused to the project, and the potential for its complete shutdown are disastrous, and have serious negative economic and geopolitical implications for Armenia. Moreover, it’s highly concerning that the political process in Armenia has deteriorated to a form of mob rule, where anyone seems to have the ability to exert their will and break any law or agreement through acts of sabotage.

It is regrettable how the Armenian government has chosen to handle the situation, seemingly setting its own politics interest ahead of the nation’s welfare, and creating a dangerous precedent for the future.

***

The Amulsar Gold Mine Project, owned and operated by Lydian International, is currently in the last phase of a two year construction process, after which it is scheduled to go into operation, with first gold expected later in the year. Once it enters operation, it is expected to become Armenia’s largest gold mine, overtaking the only other large scale gold mine in Armenia located at Sotk, owned and operated by a Russian company.

Lydian International, an Anglo-American company based in the island of Jersey, is expected to invest some 400 million dollars in the project overall, and was responsible for a majority of the entire foreign direct investment in the Armenia economy in 2017. Once in operation, the mine is expected to contribute more than 150 million dollars annually to the economy directly, while paying roughly 50 million dollars to the state budget per year.

It’s currently responsible for having directly created some 1,400 temporary jobs, forty percent of which have gone to locals, and will directly create 700 permanent jobs during operation. In addition to direct jobs created, a five to six multiplier effect should be taken into account for all of the secondary jobs that the mine creates. The mine is expected to operate for a minimum of just over a decade, with a possibility of extension given probable reserves.

The Amulsar Gold Mine Project represents by far the largest source of western investment in the Armenian economy since independence. In fact, it represents only the second large scale instance of western investment in the country, the other being a $250 million investment by an American company in the Vorotan Hydropower Plant in 2016, responsible for fifteen percent of electricity production in Armenia.

Therefore, beyond important economic implications, the Amulsar project is critical to Armenia from a geopolitical perspective. First of all, It diversifies foreign ownership in the Armenian economy, and decreases the leverage that Russia holds over the country.

Moreover, it increases the United States’ interest in the stability of Armenia, and essentially acts as a lobbying force in American decision-making to attempt to guarantee peace and stability in Armenia.

Furthermore, given that the European Bank for Reconstruction and Development (EBRD) and the International Finance Corporation (IFC) of the World Bank Group are investors in the project, its successful and timely completion would be a noteworthy achievement for Armenia, as it would increase Armenia’s likelihood of receiving further financing and support for large scale projects in the country in the future. The success of the mine would be a major achievement for the investment reputation of Armenia in the eyes of other western companies and investors who might be leery given their unfamiliarity with the country and region, as well as the concerns caused by a frozen conflict.

In addition to the economic and geopolitical implications, the Amulsar Gold Mine Project is considered a remarkable step forward in the mining and construction process in Armenia. Being under the strict monitoring of the World Bank and the EBRD, Amulsar is the first Armenian mining project – and in fact the first Armenian construction project of its size – to adhere to highest international environmental and safety standards.

It represents a important step forward in mining standards in Armenia, a country that, for better or worse, will be dependent on mining in the near future considering metals, precious metals, and mineral products together are responsible for a majority of Armenian exports.

The environmental concerns regarding the project, specifically that it is locations in the proximity of the Arpa River as well as a water channel leading to Lake Sevan have been repeatedly addressed by a plethora of environmental studies that have clearly demonstrated that the steps taken by the mine have completely mitigated these threats. Amulsar has operated in stark contrast to other mines in Armenia, who often lack transparency in their financing, ownership, and most important of all, environmental oversight.

If the protests continue and Lydian International is forced sell, its most likely buyer will be a Russian company. There have been rumors circulating in Armenia in recent days hinting at this. This could potentially be a major environmental calamity for Armenia, as many of the current concerns about the mine, which have no basis in reality due to the high level of transparency and oversight, may actually come to fruition.

***

Curiously, in addition to the preceding two year construction period, work has been going on on the site for over a decade, and yet there was no widespread local opposition to the project. Protests were always political in nature and limited to extremist environmental activists from Yerevan. In fact, there was a level of gratitude by many local villagers who, in addition to having received large compensations for their lands, would have had to leave their families to work in harsh conditions as seasonal laborers abroad without the mine.

However, thanks to an unrelenting campaign of protests and disinformation by environmental extremists, as well as national mass hysteria fueled by the governmental change, people who have little to no understanding of the greater environmental, economic, or political implications of shutting down the mine are on the verge of causing significant damage to Armenia. Under normal conditions, this would not have been a realistic threat. However, the new Armenian government has refused to act.

This is partially caused by the fact that the protesters are using the very same methods that brought Nikol Pashinyan to power. Moreover, Pashinyan’s entire claim to power rests in his popular support. Lacking a traditional national party infrastructure or the financial means to run a national campaign, Pashinyan is dependent on maintaining a high level of popularity if he is to achieve victory in snap elections that will be held in approximately one year. If he were to use police force to end the protests in order continue the operation of a mine and the policies of the previous government, Pashinyan would risk doing permanent damage to his popularity. 

This pursuit of populism is how Armenia finds itself in its current situation. And beyond the aforementioned catastrophic direct economic and geopolitical damage to Armenia, this populist approach sets a frightening precedent in the country. It’s the creation of a situation where anything that is unpopular with one particular segment of the population, no matter how critical for the nation, can be derailed thanks to illegal acts of sabotage. This ultimately threatens to create a form of mob rule where unqualified fringe minorities can make decisions with far reaching consequences simply because they threaten to break the law.

Therefore it is critical for national interest for the Armenian government to set aside personal political prospects and act immediately to end the protest movement at Amulsar. In addition to the environmental threat, the failure of Lydian will be disastrous from an economic and geopolitical perspective. Beyond the economic loss, it will be a black stain on the practically nonexistent international business reputation of Armenia and will lead to skittishness by any potential western investor. Finally, it will lead to the strengthening of the formidable leverage that Russia has over Armenia.

When the stakes for the country are this high, it is incumbent upon the government and its authorities to intervene to restore order. 

27 Comments

  1. How much did Lidian and friends pay for the publication of this article? I wonder why you don’t mention the author’s name.

    • It would appear, based on previous articles, that the publication could have chosen to publish this as an opinion piece. However, they chose to publish it as an editorial, giving it full backing, and taking full ownership of its content. That to me is much more admirable than publishing it as an opinion piece, and using a pseudo-name if they found it necessary.

      Or perhaps, they chose to take this route because you so perfectly exemplify the mob rule mentality which the article mentions.

      Either way, this is all rather interesting and ironic, coming from an anonymous user named “H”.

    • In 1988 after the Spitak earthquake, largely as a result of hysterical mob rule, the Armenian NPP was shut down, with disastrous consequences.
      Electricity was (unreliably) available only for a few hours a day, until 1995, when the NPP was restarted.
      SU collapsed and Armenia was left with no reliable energy sources: no electricity, no natural gas, no heating oil,…nothing.
      People resorted to cutting down municipal trees for heat in freezing winters of Armenia.
      Hundreds of 1,000s left Armenia – never to return.

      Instead of a snide comment, why don’t you propose some solutions.

      Those mines provide jobs and income (to people and the State): with what are you going to replace those jobs once the mines are shut down?
      If there are no jobs in Armenia, then those (unskilled) laborers go to Russia to find jobs and many marry local women and stay.

      There are reportedly about 3,000 high tech open positions in Yerevan that cannot be filled, because there are no qualified people.
      Yet 100s of Nairit (former) employees regularly protest to get their jobs back, because obviously they cannot find jobs in high-tech, and there aren’t enough low-tech or industrial jobs in Armenia to meet the need. The official unemployment rate in Armenia is about 20%, although like here in US, the real rate is no doubt much higher.

      Again, what is your solution to creating good paying jobs in Armenia if everything that is “dirty” is shut down?

      • If there aren’t enough qualified people, then obviously people need to get qualified! People need to take initiative, and use their mind in order to solve their economic needs.

        There are too many people in Armenia studying fields that have little demand, such as languages and economics. Knowledge of English today is a must; however, one needs to also have employable, high-value skills. One of those, as you mention, is in the field of electrical engineering and computer science.

        There is nothing hindering young people from studying these fields. Perhaps young people need more career counseling when they are choosing a field of study. Young people need to think more about studying fields that have demand in Armenia and which can provide them and their families with a livable income. The 3,000 or so open positions in Armenia’s IT sector is a good example you bring.

        As with the rest of the world, older people need to re-train. As in the U.S. and Europe, a biological engineer, physicist or chemical engineer often retrains and becomes a software engineer or other similar field in order to match their skills to demand.

        Armenia’s environment (for today’s and future generations) must not be sacrificed for the sake of 700 temporary low-skill, low-paying jobs, and for the sake of some overseas investors who are hiding behind tax havens on obscure islands. We are not some uneducated, unaware, indigenous people for some people from outside to come and milk our natural resources and leave us with heavy metal contamination of our most precious water reservoir (Lake Sevan) and of our most precious agricultural land (the Ararat Valley) and some of our most important mountain water sources: the Arpa River and the Vorotan River.

        Remember the book “Why Nations Fail” by Acemoglu and Robinson, wherein the authors compare the reasons why the North American colonies turned into a prosperous democracy, whereas the South American colonies turned into lower-prosperity dictatorships. The reason wasn’t culture: that the North was colonized by the English and the South by the Spanish and Portuguese. The reason was that the South was full of natural resources, and the European colonizers in the South continued on the existing hierarchical model of society there and created extractive political and economic institutions; the availability of large quantities of gold and silver enriched the Spanish and Portuguese back home in Europe, but it hindered the growth and prosperity of the local people. On the other hand, in the North, there were no such large quantities of gold and silver as in the South, and the indigenous population itself was not centrally and hierarchically organized. Democracy grew out as a necessity of the environment of the North, it was demanded by the colonists as a form of self-government.

        We cannot let Armenia turn into an extractive, natural resources-based economy as South America did. This is not the model of developing democracy as history has shown. Armenia needs inclusive political and democratic institutions, and the recent events in Armenia is a positive step toward this direction. Read “Why Nations Fail”.

        • Correction: Armenia needs inclusive political and *economic* institutions, and the recent events in Armenia is a positive step toward this direction. Read “Why Nations Fail”.

        • Re: {If there aren’t enough qualified people, then obviously people need to get qualified! People need to take initiative, and use their mind in order to solve their economic needs.}
          .
          Sure, why not: maybe you can do something about, you know, start another Tumo and start qualifying people.
          It’s so obvious. Oh, forgot the ex mark: It’s so obvious!!!
          .
          Re: {“Why Nations Fail” by Acemoglu and Robinson, }.
          .
          A couple of things: first, no doubt Acemoglu is a brilliant guy, MIT and all.
          But he is , like all other economists….and economist.
          Economists write books and predict things that never materialize.
          How many successful companies has Acemoglu started?
          How many jobs has Acemoglu created?
          .
          {Read “Why Nations Fail”.}: since you have read, no need for me to read it. I have read lots of books that examined reasons why some societies succeed and others fail (e.g. “Guns, Germs, and Steel”).
          You claim the conclusion of the book is this: “….The reason wasn’t culture: …….”
          If Acemoglu & Co wrote a book to reach that illogical conclusion, (assuming your interpretation is correct), then it re-enforces my dim view of economists. Of course it was culture: evidence is all over the world. Evidence was present in former USSR. All 15 republics were treated the largely the same by the Communist leadership in Moscow. Yet little Armenia was responsible for creating and producing about 30% of the hi tech electronics/computers and such for the Soviet military industry. How did that happen? .
          .
          There are 5 countries in the world founded by what Churchill called ‘English speaking peoples’: England, US, Canada, Australia and New Zealand. All 5 are well-to-do, well run, prosperous countries.
          Spain and Portugal are a mess, and so are the countries they influenced or founded in the Americas.
          .
          In my original post, I specifically noted the actual, permanent damage that the mob-ruled shutdown of the Armenian NPP has caused, i.e. the permanent reduction of its population by 100s of 1,000s. You are unable to dispute it, because it’s true, but in response wrote this: “We are not some uneducated, unaware, indigenous people for some people from outside to come and milk our natural resources…”. Very dramatic, but a non sequitur. Until you and those who think like you can come up with concrete proposals of creating real, good paying jobs – instead of writing vacuous nonsense such as ….”People need to take initiative, and use their mind in order to solve their economic needs.”…..then the country has to do what it has to do to survive.
          No jobs, no people: no people, no country.
          .
          And finally.
          .
          TheArmenite wrote this: [The environmental concerns regarding the project, specifically that it is locations in the proximity of the Arpa River as well as a water channel leading to Lake Sevan have been repeatedly addressed by a plethora of environmental studies that have clearly demonstrated that the steps taken by the mine have completely mitigated these threats.].
          .
          Do you or those who oppose the Amulsar Gold Mine Project have _any_ evidence to the contrary?
          Yes or No?
          And what if there is _some_ (temporary) contamination?
          What would you guys rather have: some contamination and a country with people in it or zero contamination and no people – you know, a nature preserve. Beautiful pristine Armenia with no Armenians living in it.
          During the massive industrialization of Soviet Armenia there was lots of contamination.
          I remember the chemical odors when we went to visit friends who lived near Nairit (Kaoochuck).
          Even some of the vegetable they grew in their garden had an unusual taste (yeah, its true).
          I am sure some people got sick and died prematurely due to contamination.
          But it is an undeniable fact that from 1950s Armenia experienced a population boom, growing from about 1.5 million in early 1950s to 3.5 million in 1990. Population has stagnated since then, with extremely large numbers of working age men having moved to Russia to find work – any work – and far too many of them staying there permanently.
          .
          Again: what is your solution to creating jobs and opportunity in Armenia so that people stay and re-populate Armenia.

          • 1) TUMO is an afterschool program. For someone who wants a high-paying job in Armenia’s IT field (where the industry says there are 3,000 unfilled positions) one can apply to the American University of Armenia (or several other universities) and start a career in Computer Science. Yes, people need to take initiative, see what the industry demands and study the appropriate fields.
            —–
            2) Acemoglu doesn’t need to start a successful company to make a point. He is considered among the top 10 most prominent economists in the world. And his work “Why Nations Fail” is already considered a classic in the field. Read it. You might learn something new.
            —–
            3) “English-speaking peoples” is not a requirement for a successful state. I won’t get into that discussion. You can think of many successful nations that are not English-speaking.
            —–
            4) With regard to the Armenian Nuclear Power Plant, I didn’t respond to that not because I cannot refute it, but because your argument was so weak. Metsamor was shutdown in the wake of the Spitak earthquake of 1988, in the wake of the Chernobyl disaster in 1986, and for the fact that it does not have a containment vessel in the event of a meltdown! Also, the energy crisis in Armenia in the early 90s wasn’t only due to the shutdown of Metsamor (which provided about 40% of electric ouput) but also because the natural gas-fired power plants could not operate because the natural gas pipelines bringing gas from Russia via Georgia were damaged by Azeris.
            —–
            5) The 700 temporary, low-skill, and low-pay jobs that the proposed Amulsar Gold Mining project would employ would neither make or break the Armenian economy. It is ridiculous to say that without the Amulsar mine, there would be no jobs and people would emigrate. The major reason for emigration in Armenian hasn’t been for a lack of jobs, but for a lack of rule of law; people just didn’t want to invest their life’s work into a place that does not guarantee the protection of property rights and the enforcement of contracts.
            —–
            6) With regard to the mitigation of acid drainage and heavy metal contamination of the Arpa River Valley, the Arpa-Sevan tunnel, the underground water sources of Jermuk is a total lie. All independent studies have shown that there is absolutely no way to contain 86 MILLION TONS of cyanide and heavy metal slush. Heavy metals will continue to pollute the immediate region, Lake Sevan, and the Ararat Valley for thousands of years. Do you know what 86 million tons of tailings look like? Have you ever visited Amulsar?
            —–
            7) Armenia will continue have its population, without the 700 temporary, low-skill, low-pay jobs offered by the proposed Amulsar mine. To argue the opposite is quite frankly ridiculous. The contamination with heavy metals of the Arpa River Valley, the Jermuk underground water sources, the Vorotan River, Lake Sevan and the Ararat Valley represents a national security threat to the Republic of Armenia and its population. Heavy metal contamination of soil, food, livestock and water have been shown to cause DNA mutations, cancer, birth defects, and infertility. The contamination is NOT temporary; it is permanent on the scale of human civilization — it would take thousands of years for the heavy metal concentrations to come back down to their natural levels. There is absolutely no justifying the opening of a gold mine in the heart of Armenia.
            —–
            8) Since you seem to like the old days of the Soviet Union, let me let you in on a fact: Armenia’s largest gold mine today, Sotk, was opened during Soviet times. Sotk is located about 25 km from Lake Sevan. The most economic thing to do would have been to construct the gold processing plant next to the mine; but the Soviets didn’t choose this route because they knew that the heavy metals and acid of the tailings would eventually drain into Lake Sevan and contaminate not only Armenia’s most precious water reservoir, but also the entire Ararat Valley. Instead, the Soviet built a 250 kilometer electric rail system to haul the raw ore from Sotk to the town of Ararat for final gold processing. Technically and environmentally there are no differences between Amulsar and Sotk: the waters of each both drain into Lake Sevan. Even more, Amulsar also drains into the Arpa River Valley (a sizeable agricultural area), the Vorotan River, and the aquifers of Jermuk, an important mineral water source. If the developers built a rail network to transport raw ore to the Ararat Valley or south to near the border with Iran, the environmental risks would have been mitigated to a certain extent. But to open a gold mine in the heart of Armenia is utter nonsense. As I have shown, it neither makes environmental nor economic sense to the Armenian people and to the Armenian state.
            —–
            9) My solution to creating jobs and opportunity in Armenia is for every Armenian to create a job for him/herself and also employ at least ONE other person. This is what I’ve done in Armenia now. If every Armenian (especially from the Diaspora) follows in this example, there would be a surplus of employment opportunities in Armenia. It’s a very simple formula. No excuses.

      • One other note: believe me, if a mine operator can automate the work of excavators and haul trucks, they will do so, because that would slash their costs (what few millions they pay in wages) and they won’t need 700 people operating the mine. They would probably need only 100, and out of those maybe 50 would be for security. And, indeed, there is active work today going on to automate the entire process of mining. Autonomous excavators and haul trucks already exist, and the process of crushing ore and extracting gold is already automated. As such, with this model, the circle of people who would benefit from Armenia’s natural resources would shrink even further… And the case for the nationalization of (or at least far higher rates of taxation of) Armenia’s mines grows larger and larger by the day.

      • It’s not 700 jobs my friend, is a a large portion of the state budge. Copper alone was responsible for over twenty hundred million dollars contributed to the budget last year. The entire budget was 2.7 billion dollars.

        • MYTH

          The mining industry in Armenia pays a large amount of taxes

          FACT

          In 2016, the mining industry paid 39.1 million drams (about $81.5 million USD), which is only 3.5% of the Armenian state’s tax revenues

        • The loss in tax revenues from agricultural and livestock yield for the next 300 years due to acid drainage and heavy metal contamination of Lake Sevan, Jermuk’s underground water, the Yeghegnadzor Valley and Ararat Valley would completely dwarf the $44 million in taxes every year that Lydian would pay to the Armenian state budget for the next 11 years.

          If we were to add to this the health costs to the state budget related to the population’s illness (cancer and birth defects) from eating and drinking contaminated foods, livestock, and water, then this would completely eclipse that yearly $44 million.

          If we add to this the issue of infertility caused by the consumption of heavy metals (see “Heavy metals and fertility”, Gerhard, 1999), then we are already dealing with an issue of national security.

        • Another common myth and lie is that the mining industry under-reports its actual revenues and is secretly used to fund the Armenian military.

          This is a total lie, and unfortunately some naive people believe this.

    • It would seem to me if Lydian had paid someone to write an article, they wouldn’t have had them mention that the company is in trouble and is looking to sell, considering this will tank the price of the stuck.

  2. This article reads like a Lydian advertisement.

    The author doesn’t seem to have any concept of the environmental impact of the Amulsar gold mining project, nor any concept of science or the process of gold mining. Gold mining technology hasn’t changed since the 1960s: earth is removed to expose ore, ore is crushed to powder, mixed with cyanide, gold is extracted, and the remaining toxic slush of cyanide and heavy metals is left on site, forever to remain there until it seeps into the groundwater. (To give one the scope of the amount of toxic waste generated, let’s remind ourselves that only 1 or 2 grams of gold are extracted per one TON (1,000,000 grams) of ore; in other words, only one or two parts per million are extracted, and the rest is toxic waste.)

    In fact, the entire watershed and groundwater drains into Lake Sevan via the Arpa-Sevan tunnel, which runs almost directly underneath the site of the ore processing facility. Let’s remind ourselves that Lake Sevan is used to irrigate much of the Ararat plain, which is the most important agricultural area of Armenia. Heavy metal poisoning of Lake Sevan’s waters would introduce heavy metals into the food chain: from agriculture to livestock, and finally into humans. Let’s also remind ourselves that heavy metals in animals lead to irreversible DNA mutations, some of which lead to cancer and also to major birth defects. Today, the levels of cancer and birth defects are notably high in the Lori and Syunik provinces, where there is high mining activity. Birth defects among animals are well-documented and include 2-headed sheep with 6 legs (there was a CivilNet video report about this a few years ago).

    In short, the disastrous environmental consequences of the project cannot be justified by any economic measure.

    Nontheless, even the economics make no sense for the Armenian state. Revenues of 10% of the value of the gold into the state budget is a joke, and once the mine is closed, the state will carry the burden of waste management (if any waste management were done at all, its lifetime cost would far exceed the 10% paid to the state). Looking at Armenian and international practice, this will mean that acid drainage will seep into the groundwater and make its way to the Arpa river as well as the Kechut reservoir, and from there to the agricultural areas of Yeghegnadzor, Lake Sevan, and finally to the Ararat valley and into the human food chain.

    This so-called “foreign investment” is into a factory and piping and equipment that will only be used for 10 years. The “permanent jobs” aren’t permanent at all; they will be gone in 10 years. And those jobs are temporary low-skill, low-pay work: hardly the kind of jobs that will increase the standard of living in the area and in Armenia in general.

    With regard to the involvement of state officials in the project, let us suffice to say that the millions of dollars in “donations” that Lydian gave to the now defunct “Luys Foundation” which was chaired by President Serge Sargsyan and by former Prime Minister Tigran Sargsyan is enough grounds to open an inquiry into a corruption case. Why would Lydian — who has not turned a profit in Armenia — be donating so many millions of dollars to a so-called “charitable” foundation when Lydian had not even turned a profit in Armenia? Why did Serge Sargsyan close down “Luys Foundation” shortly after his resignation? (Let us remind ourselves that it is through such personally-controlled “charitable” foundations that corrupt politicians obtain their bribe money. For example, the Clinton Foundation in the case of Bill and Hillary Clinton.)

    Finally, the author of this article speaks as if he’s an expert on mining, but in reality, he is simply repeating the unverified claims of the mine operator. Independent studies of the Environmental Impact Report have shown major discrepancies and flaws, and point to high-level corruption involved in the granting of the license.

    • Lydian has not donated millions of dollars to Luys as you say. It was a $256,000 donation. Take a look at the other mines and energy players in Armenia. They have been donating millions to Luys. The Lydian donation was spent directly on students who are studying in overseas universities, particularly in the engineering field.

    • It would be appear that literally every single conclusion which you draw is based on false assumptions

      “– There were other issues raised with respect to Amulsar…

      – There is an interesting trend observed in the history of Amulsar project critique. A few years ago, one could often hear statements that there is uranium at Amulsar that will result in uranium pollution of the region. When was the last time you heard about this?

      – I think I haven’t heard about it for long.

      – Yes. I assume after consulting with some experts, there is an understanding among the activists now that there is no such issue and the topic is not on the agenda any more. The next one was cyanide. We kept hearing that the cyanide will spread all over the area and will even reach Sevan. Once again it took a few years for many of the critics to admit that cyanide is expensive by itself and will also contain the extracted gold and it would be at least irrational to assume that the cyanide will flood the area”

      https://en.168.am/2017/11/01/21888.html

    • Also the effective tax rate in the mining industry in Armenia is 36 percent, and not 10 percent, as you seem to believe.

      So much anger, so much emotion, so much conviction, and yet so little knowledge. What makes you so angry and so sure of your convictions?

      • I have simply stated the facts. As to whether Lydian has donated $256,000 or $2,560,000, the case remains as to why an obscure company that is registered on a small tax-haven island off of England, has decided to donate this amount of money to a “charitable” organization run by the then-President of Armenia. To put it lightly, there is a case for corruption here.

        With regard to Uranium, the issue here is not only Uranium, but any other heavy metals that are normally not in the environment but are kept under layers of soil. Heavy metals are the real issue here — whether that is copper, lead, mercury, uranium (what is a heavy metal? Any metal with atomic number greater 20; in other words, any element heavier than Sodium).

        The presence of heavy metals above natural levels in the soil, food and water that humans and animals consume lead to irreversible DNA mutations, which lead to cancer and serious birth defects. We are not only talking about the toxicity of cyanide here, and the acidity of the tailing left behind. We are talking about the inevitability of heavy metals from the processed ore making its way into the ground water, contaminated the natural waters of Jermuk, the Arpa River that irrigates the Yeghegnadzor Valley, and importantly, the contamination with heavy metal of the Arpa-Sevan Tunnel which carries water to Lake Sevan. There will also be some contamination going south, the Spendarian Reservoir. The contamination of these areas — the “heart” of Armenia — will lead to the irreversible contamination by heavy metals of Lake Sevan and the entire Ararat Valley, the main food source for Armenia’s population.

        Let’s think about current and future generations. Let’s not create an industrial waste zone out of Armenia. Water is life. And water contaminated with heavy metals is not conducive to life.

        If you want to live in Armenia, then the issue of Amulsar is a no-brainer. If you live in England or you want to make some money from Amulsar and you see your future in England or the West, then of course it wouldn’t matter to you whether Lake Sevan, the Arpa River Valley, and the Ararat Valley are contaminated with heavy metals. I totally understand your viewpoint.

      • Also, to answer your question regarding the effective tax rate of the mine, let’s do a back-of-the-envelope calculation to show that the real taxation rate is close to 10%.

        Lydian expects to extract 7.8 tons of gold every year for 11 years. This is 85.8 tons of gold over the lifetime of the mine.

        The price of gold today is $40.22 per gram. There are 1,000,000 grams in 1 metric ton. Therefore, the price of gold today is $40,220,000 per ton.

        The 85.8 tons of gold that will be extracted over the lifetime of the mine is therefore worth $3,450,876,000

        Lydian says it will pay $488 million into the state budget.

        We divide $488 million by $3,450,876,000 and we get 14.14%.

        That is to say, with the current price of gold, Lydian will only be paying 14.14% of the value of the gold they will extract as taxes to the state budget. Considering that the price of gold has been 50% higher in the recent past, at a reasonable $55 per gram of gold price, Lydian would be paying only 10.3% of the value of the gold it extracts into the state budget.

        This is unacceptable.

        The Amulsar gold mining project not only makes no environmental sense, it also makes no sense for the Republic of Armenia and it makes no sense to the Armenian people.

        • The Amulsar gold mining project not only makes no environmental sense, it also makes no *economic* sense for the Republic of Armenia and it makes no *economic* sense to the Armenian people.

        • that’s a lot of impressive fourth grade mathematics, but that is not how taxation is calculated anywhere around the world. taxation is calculated relative to profit. If you were taxed 36 percent on your turnover, you would be bankrupt within a week my math adverse friend.

          how the mining industry is taxed:

          $1000 gross revenue

          $400 of operation of cost
          $80 depreciation
          $80 other

          $440 profit before taxes

          $40 Royalty #1: 4 percent of gross revenue
          $55 Royalty #2: 12.5 percent of profit before taxes

          $345 taxable income

          $69 20 percent tax on taxable income

          $276 net income after taxes

          Totals
          $440 profit before taxes
          $164 revenue to the country
          $276 net profit

          thank you for contributing to the discussion

          • Even a fourth grader would understand that if the Armenian state budget is receiving only 10% of the value of gold being extracted, then both the Armenian state and the Armenian people are being ripped off.

            That same fourth grader would also understand that $3.4 billion dollars (90% of which would go to private individuals) would not be worth contaminating Lake Sevan, the Yeghegnadzor Valley, the Vorotan River basin, and the Ararat Valley with heavy metals.

  3. Some posters, unable to factually refute the article, resort to accusing TheArmenite of……e.g.:
    .
    {“How much did Lidian and friends pay for the publication of this article?”}
    {“This article reads like a Lydian advertisement.”}
    .
    By an interesting coincidence Armenian Weekly just published an article that largely repeats the arguments of TheArmenite.
    .
    The article was written by one Raffi Elliott:
    [Raffi Elliott is a Canadian-born entrepreneur and occasional journalist who like to ramble on about socioeconomic and political issues in Armenia. He lives in Yerevan with his family. He also holds a masters degree in International Relations.]
    .
    Obviously another paid shill for the Lydian.
    .
    Here is the link to the AW article:
    https://armenianweekly.com/2018/07/04/are-we-overdoing-civil-disobedience/
    People can take the time and read it, if they are so inclined.
    But I will excerpt some relevant/interesting paragraphs, with commentary.
    .
    [These actions, which caused the mine an estimated 5$ million in damages, were harshly condemned by Pashinyan, who instructed activists to respect the rule of law and wait for the results of a promised government inquiry into the mining activities’ environmental impact. For many of these activists, Pashinyan’s apparent solidarity with the mining company was interpreted as a stinging betrayal.]
    .
    Another paid agent of Lydian.
    Et tu Pashinyan?
    .
    [Lydian has, on numerous occasions, responded to these concerns by citing a number of independently-conducted environmental impact studies demonstrating the extent to which the mining firm had gone in order to comply with the strictest international environmental, safety, and labour standards. They argue that this mine would represent the gold standard (pun intended) of mining in Armenia. These findings were separately confirmed by the European Bank of Development (EBRD) and the International Finance Corporation (IFC), which both require extremely high levels of environmental compliance in order to finance projects.]
    .
    Confirmation shmanformation: we are the SorosaMob, and what we say goes.
    .
    [Unfazed by these reports, environmentalists have resorted to more direct tactics. Over the last several weeks, activists have taken time off from their non-profit jobs in Yerevan to bus 200 km (about 124 miles) down to the chronically impoverished Vayots Dzor region and physically block work on the mine.].
    .
    Sorosapaid “activists”, aka SorosaCadres, carrying out their instructions faithfully.
    .
    [They also face the opposition of the local people who risk losing well-paying, long-term jobs. And perhaps most strikingly, they offer no viable alternative for sustainable development in the region]
    .
    Who cares about the local people? “We are getting paid SorosaDollars and live quite comfortably in Yerevan: the heck with everybody else.”
    .
    [a publicly traded corporation, which has legally purchased the mining rights to the mountain, conducted every environmental sustainability study available, earmarked $450 million in investments into the area (one of the largest single investments in Armenian history), has paid over $3.5 million in taxes to the State coffers and created 1500 jobs in a region which struggled with chronic unemployment for a quarter of a century.]
    .
    Right.

    • Enough with the conspiracy theories. Soros was not a factor in Pashinyan’s rise to power; your beloved HHK and their out-of-touch “leadership” was reason enough for things to turn out the way they did in Armenia. It’s so easy for so many of these Armenian conspiracy theorists to point to some Hungarian man and accuse them of “facilitating” every bit of disgruntlement and dissatisfaction as if the Republican Party’s insane nepotism and kleptocracy had no real-life implications for everyone who wasn’t a part of their criminal network. Get real.

      • {Enough with the conspiracy theories. Soros was not a factor in Pashinyan’s rise to power;}
        .
        Where in my post did I say or hint that Soros had anything to do with Pashinyan becoming PM or that Soros or his Open Society Foundation had anything to do with the popular demonstrations that forced Sargsyan to resign?
        Show me.
        The one place I mentioned Soros is this:
        [Sorosapaid “activists”, aka SorosaCadres, carrying out their instructions faithfully.]
        …….because,
        [Unfazed by these reports, environmentalists have resorted to more direct tactics. Over the last several weeks, activists have taken time off from their non-profit jobs in Yerevan to bus 200 km (about 124 miles) down to the chronically impoverished Vayots Dzor region and physically block work on the mine.].
        .
        I stand by my assertion.
        .
        Who funds those non-profits from where the employees aka SorosaMobs can afford to take as much time as they need to travel 120+ miles and engage in disruptive actions against the wishes of the people who actually live there.
        Pashinyan himself has criticized their mob-like tactics.
        What’s the matter? you guys no longer trust Pashinyan?
        .
        {your beloved HHK…}
        .
        I don’t love _any_ political party either in Armenia or Armenian Diaspora.
        I love Armenia, Artsakh and the Armenian people.

  4. It is also worth mentioning that one of the contributors to this website is also directly involved in a mining operation in Armenia. You may want to disclose that, in the interest of fairness.

    Interesting that this is among the few publications to lament the tyrannical rule of HHK and the “mob” that was the Sarkisian Crime Family. There is no more place for the Sarkisian-HHK style of spineless, indignant, and self-destruction rule in Armenia, much to the chagrin of this publication, which does a good job of masking that regime’s corruption with “articulate” English-language arguments.

    • {It is also worth mentioning that one of the contributors to this website is also directly involved in a mining operation in Armenia. You may want to disclose that, in the interest of fairness.}
      .
      If you mean Mr. Almasian, then his TheArmenite bio says this:
      [Mher Almasian is an Armenia based structural engineer and software developer and the Deputy Editor of The Armenite.]
      His photo sporting a hard-hat appears in his bio as well.
      .
      Now, what are you alleging by …….”involved in a mining operation in Armenia.”?
      I have no idea if he is or isn’t, but what if he is?
      Is it illegal to be gainfully employed as a structural engineer in a mining operation in Armenia?
      Is it a sin?

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