UK Foreign Office criticised for supporting controversial gold mine in Armenia

In a fierce dispute between mine owners, international investors and local residents in Armenia, the UK has weighed in - on the side of the international mining company.

Thomas Rowley
2 September 2019, 12.01am
Entrance to Amulsar mining site, July 2018
Image: Peter Liakhov
  • In 2018, Armenia underwent its “Velvet Revolution”, which saw a mass protest movement force a kleptocratic regime out of power
  • Armenia’s revolution has had other effects, such as blockades over a flagship $400 million gold mining project run by mining company Lydian International
  • New documents released under Freedom of Information laws show the UK Foreign Office’s private engagement in support of Lydian International

The UK Foreign Office has been criticised by a British MP and international campaigners for its support of a controversial mining company in Armenia, openDemocracy reports today.

New information released under the Freedom of Information Act shows frequent contacts between the UK Foreign Office and Lydian International, the company behind the flagship Amulsar gold mining project in the South Caucasus state. These releases shine a light on campaigners’ concerns about the ties between the mining company and the British embassy in Armenia.

The records, obtained by openDemocracy, reveal how British embassy staff in the Armenian capital Yerevan, including ambassadors, were in regular contact with Lydian International about its Amulsar gold mine from 2013 to 2018. They arranged presentations, seminars, meetings, working groups and project updates. For example, the records list 55 contacts between January and July 2018 between Lydian International and the embassy.

An index of internal communications for 2018, also obtained by openDemocracy, shows how the embassy has followed Amulsar since Armenia’s ‘Velvet Revolution’ put the $400 million mine at the forefront of the country’s politics.

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The list details document titles such as “Lydian updates draft”, “Questions for the Ambassador”, “Meeting with Acting PM Pashinyan key points” and “Readout of meeting with Lydian”, recording, for example, seven internal embassy documents relating to Lydian produced in September 2018. That month, the Armenian government ordered an assessment of the effect the gold mining operation would have on the country’s water resources, as well as an independent review of Lydian’s environmental impact assessment.

Armenian environmental campaigners have raised concerns about this relationship, writing open letters about ambassadors’ conduct to the UK Foreign Office in 2013 and 2019.

“It is concerning that British government representatives in Armenia have been supporting the construction of this remarkably controversial mine, one which could have a deleterious effect on the environment, as well as the associated health and wellbeing of rural communities,” says Labour MP Lloyd Russell-Moyle. “These documents raise questions about why the UK government would take such a political risk.”

A Foreign Office spokesperson said: “British embassies play a positive role in helping to grow business around the world for UK companies. As such, the British embassy in Yerevan engages with British businesses active in the Armenian market.”

Lydian International did not respond to requests for comment.

“We can make Lydian go away”

Located in the southern Armenian province of Vayots Dzor, the Amulsar gold mine, owned by Jersey-incorporated Lydian International, has been in development for over a decade. In 2013, UK ambassador Katherine Leach called it “potentially the largest British investment in Armenia”. Lydian states it will provide $488 million to the Armenian state budget in tax and royalty contributions through the ten-year operation of the mine, as well as provide 770 jobs.

But after a mass protest movement pushed Armenia’s Republican Party out of power in April and May last year, the mine has become the site of a major stand-off between the Armenian government, protesters and the mining company.

May 2018: revolution in Yerevan
May 2018: revolution in Yerevan
(c) Kommersant Photo Agency/SIPA USA/PA Images. All rights reserved

In June 2018, local residents and activists started blockading roads to the mine, preventing the company from finishing construction and starting the full-scale extraction of gold. As a leader of a protest outside Lydian’s office put it last year: “If we managed to make Serzh Sargsyan [Armenian leader forced to resign in 2018] go away, we can make Lydian go away too.”

With the blockades remaining at Amulsar, in March 2019 Lydian notified Armenia of a potential dispute under bilateral investment treaties with the UK and Canada. The Armenian press has reported potential compensation figures up to $2 billion.

“Lydian is a company whose threat of international ‘corporate courts’ arbitration appears to have bullied the Armenian government into submission over the dangerous Amulsar mine, forcing the Armenian government to betray its own people,” comments James Angel, policy and campaign manager at Global Justice Now, which is leading a UK campaign against the mine.

"Why is the UK Embassy working so closely with this toxic company who are riding roughshod over democracy in Armenia? Instead, it should be doing all it can to support the Armenian people’s struggle for clean water and decent, sustainable jobs."

What the locals fear

Lydian calls Amulsar an “example of responsible mining in Armenia”. Successive UK ambassadors and Foreign Office officials have publicly backed the project since 2013, saying that it meets high international standards and had engaged well with local stakeholders, as well as meeting with Armenian officials concerning the project.

That year, the Save Teghut civic initiative wrote an open letter to the UK Foreign Office, calling on it to investigate UK ambassadors’ support for the Amulsar project.

“It is incomprehensible that the Ambassadors of the UK defend the private interests of a company registered in an offshore zone”

In the letter, leading environmental lawyer Artur Grigoryan claimed that UK ambassadors Katherine Leach and Jonathan Aves “continuously exert pressure on the Government of Armenia” in support of Lydian International, citing UK diplomatic staff’s meetings with Armenia’s Ministry of Nature Protection and their public statements.

“It is incomprehensible that the Ambassadors of the UK defend the private interests of a company registered in an offshore zone,” the letter stated.

Responding to Save Teghut, the Foreign Office said that the ambassadors’ actions were “strictly in accordance with appropriate international practice and agreements” and that it was “standard and accepted practice for the British Government and its diplomatic missions to encourage trade and investment opportunities overseas.”

At a groundbreaking ceremony in 2016, the UK ambassador at the time, Judith Farnworth, lauded Lydian International’s dialogue with project stakeholders, including “most crucially, with the local communities”.

This dialogue does not seem to have convinced residents of the villages and town near the mine. In Gndevaz, the village closest to the Amulsar mine, 210 residents made an official complaint to the International Finance Corporation (IFC), a financial sponsor, in 2014. They claimed that the company was “employing any possible tool to deceive” village residents over the mine. A similar complaint was made to the European Bank of Reconstruction and Development, another project sponsor.

An investigation by the IFC’s compliance advisor ombudsman reported “shortcomings in the IFC’s supervision of the assessment of impacts” in Gndevaz, although increased IFC engagement with the project led to an “international standard Environmental and Social Impact Assessment”. In 2017, the IFC stopped its funding of the project.

CC BY-NC 2.0: Raffi Youredjan / Flickr. Some rights reserved.

The town of Jermuk, a nearby tourist centre noted for its hot springs, was not initially included in what Lydian considered the ‘area of influence’ for the mine, and residents were not consulted over environmental and social impact assessments in 2015 and 2016. The IFC ombudsman’s investigation in 2017 found that the “potential impacts on Jermuk’s brand as a tourist center” had not been assessed and mitigated. In late 2018, locals collected 3,000 signatures in support of banning metal mining operations in the area, and to develop a green economy for Jermuk – a position later approved unanimously by the town council.

Locals believe that the mine is already affecting local life, according to a survey of 35 households conducted by the Community Mutual Assistance NGO in October 2018.

As part of this survey of households in Gndevaz, Kechout and Jermuk, 85.7% of respondents reported illness, such as increasing asthmatic attacks, lung diseases and dry skin. As a result of construction operations and explosions, 71.4% of respondents said they had suffered nervous breakdowns, headaches and insomnia. Respondents welcomed the contribution by the company to community infrastructure and household incomes, yet 80% of them were pessimistic about their employment prospects in ten years’ time, when the mine is projected to close.

“There is a strongly held and widely shared belief that despite any short-term economic benefits, this mine will have long-term negative consequences for the environment and for people’s health and wellbeing”

More broadly, local people, environmental activists and their international allies are protesting against the damage they believe the gold mine will do to the environment, biodiversity and human health in the area. There is particular concern about the mine’s heap leach facility, which uses cyanide to separate gold from ore, as the mine is close to a reservoir that connects to Armenia’s main source of fresh water, Lake Sevan.

“There is a strongly held and widely shared belief that despite any short-term economic benefits, this mine will have long-term negative consequences for the environment and for people’s health and wellbeing,” says Armine Ishkanian, associate professor in social policy at the London School of Economics.

“There is a great deal of public skepticism in Lydian’s claims, recently repeated by Armenian government officials, that the mine poses minimal risks,” Ishkanian says.

Lydian states that Amulsar “will show the benefit of transparent and effective investment to world class standards” in Armenia and “bring tangible, direct and lasting economic benefits to the country”.

The company fights back

To protect its reputation, Lydian has brought defamation suits against activists in Armenia campaigning against the project. The International Federation on Human Rights has criticised the company’s “worrying systematic judicial harassment and defamation campaigns aiming to silence critical journalists and human rights defenders, particularly women”.

Earlier this year, 41 international environmental NGOs co-signed a letter to Armenian prime minister Nikol Pashinyan, which reported that Armenian human rights defenders believe Lydian’s “PR strategy is to humiliate and discredit [them] through real and fake users in social media, online media and television”.

In response to one of these claims of social media harassment, Lydian stated that this was “another example of clear disinformation”.

aloyan - farnworth 2018.jpg
Hayk Aloyan, head of Lydian Armenia, meets British ambassador Judith Farnworth in June 2018 at the Queen’s birthday party event at the UK Embassy in Yerevan
Source: UK Embassy Yerevan / Facebook

The UK Foreign Office’s support for Amulsar has drawn criticism from Armenian civil society.

In June 2018, Armenian human rights and civic activists boycotted the annual Queen’s birthday event at the UK embassy in Yerevan because it was co-sponsored by Lydian International.

Womens’ rights activist Lara Aharonian wrote that she was unable to attend because Lydian International was “exploiting our country’s resources to enrich local corrupt officials and multinationals”. Those concerns did not deter dignitaries, including Armenian president Armen Sarkissian, from attending. Sarkissian acted as a board member of Lydian International in 2013.

“It is standard practice for British embassies to invite commercial organisations with a UK connection to sponsor the Queen’s Birthday Party each year in order to deliver a high-quality celebration whilst limiting public expenditure,” a Foreign Office spokesperson said.

A problem for Pashinyan

The Amulsar project has now been at a standstill for over a year due to local blockades. In July 2018, Lydian filed a complaint in support of a criminal investigation against activists at the blockades, which was later upheld in court.

That same month, a criminal investigation was opened into whether Armenian public officials had withheld information regarding potential environmental damage at Amulsar. The Armenian authorities allocated nearly $400,000 for an independent review of the project’s environmental and social impact assessment (ESIA) as part of this investigation. Although Lydian has complied with the review, the company “does not accept the need or legal basis” for it, since the Armenian government has already confirmed its compliance with environmental legislation.

“This isn’t simply about the mine. It is about the nature of governance and the future of democracy in Armenia”

This independent review was published earlier this month, and on this basis Prime Minister Pashinyan appeared to decide to permit the mine to go ahead despite protests in Jermuk and Yerevan. “The Audit Report substantiated Lydian’s prudential approach to environmental stewardship,” said Lydian CEO Edward Sellers in response.

The International Federation on Human Rights responded to the new report by pointing to the serious criticisms of Lydian’s ESIA process, such as land acquisition and public consultations, contained within. The organisation emphasised that the report contained “a number of worrying conclusions on the environmental assessment and monitoring plans”, as well as highlighting the report’s conclusion: “The ESIA/EIA [environmental and social impact assessment] assessments are deficient and corresponding conclusions are unreliable. Accordingly, the question of whether exploitation of the ore deposit can conclusively be considered safe cannot be answered.”

Days later, however, Pashinyan requested that Armenia’s Ministry of Environment decide whether a further environmental impact assessment (EIA) was required for the Amulsar project. Lydian called the news “disappointing”, stating that the company “had been subject to three environmental audits over the past year during which there was no suggestion that any additional EIA process would be required”.

Screen Shot 2019-08-28 at 10.30.20.png
24 August 2019, protest march against Amulsar mine, Yerevan
Source: News AM / YouTube

Representatives of Armenian civil society recently called on the UK, US and Swedish embassies to withdraw their support for Amulsar. Addressing the ambassadors, the open letter cited long-standing local opposition to the mine, as well as the new review of the ESIA, which it described as “staggering in its implications”.

“Would any license to operate an open pit mine, in your backyard, ever be granted on the basis of incomplete, inaccurate and fraudulent ESIA? We know the answer to this is ‘no’ and ask that this standard be applied to the citizens of Armenia,” the letter said.

“The Amulsar case has become a test case for Nikol Pashinyan’s government,” comments Armine Ishkanian. “Many civil society activists, who were Pashinyan’s earliest and most active supporters during the protests in the spring of 2018, are very disappointed in his handling of the issue.

“This isn’t simply about the mine. It is about the nature of governance and the future of democracy in Armenia.”

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