The Amulsar gold deposit, a significant asset for Armenia’s economic future, is on the cusp of revival, as Finance Minister Vahe Hovannisian announced that mining operations may kick off by mid-2024. This comes after a tumultuous history marked by protests, political changes, and financial challenges. The gold mine, licensed in 2016 to Lydian Canada Ventures, was initially slated to produce a staggering 210,000 ounces of gold annually, valued at around $550 million at current prices. However, the ambitious plans were derailed when environmental activists blocked access to the site following the 2018 “velvet revolution” that brought Prime Minister Nikol Pashinian to power.
The protesters raised alarm bells about the environmental impact of the mining operations, claiming it would devastate the local ecosystem. Lydian, for its part, has consistently countered these claims, asserting that its modern mining technology would mitigate potential environmental damage. Despite the protests, the Pashinian administration did not revoke Lydian’s licenses, opting instead for a hands-off approach that allowed the blockade to persist.
Fast forward to today, and the situation is still fraught with uncertainty. Lydian, which claims to have invested $460 million before the blockade, filed for bankruptcy protection in Canada in 2019 and has since undergone restructuring. The company is now backed by U.S. and Canadian equity firms with a keen interest in mining ventures. Following the fallout from the 2020 Nagorno-Karabakh conflict, the Armenian government has sought to revive this crucial foreign investment project. A memorandum signed earlier this year offered the government a 12.5 percent stake in the operation in exchange for risk management assurances.
However, the government’s indecision has left the project in limbo. Lydian’s subsidiary has stated it requires an additional $200 million to complete construction of the mining and smelting facilities. The plan included borrowing $100 million from the Eurasian Development Bank (EDB), but that application was recently withdrawn, leaving the company scrambling for alternative financing. Economy Minister Gevorg Papoyan revealed that negotiations are underway with unnamed Armenian banks for a $150 million loan, but the uncertainty surrounding these discussions raises eyebrows.
Hovannisian’s comments underscore the government’s hope for economic growth tied to the Amulsar project. The potential for a thousand jobs and $60 million in annual taxes is a tantalizing prospect for a nation that has struggled to attract large-scale Western investments during Pashinian’s tenure. Yet, the specter of ongoing lawsuits from foreign investors looms large, complicating the investment landscape further.
As the government sifts through the documentation submitted by Lydian, the stakes couldn’t be higher. The future of Armenia’s mining sector hangs in the balance, and the Amulsar project could either pave the way for a new era of economic growth or become another cautionary tale of missed opportunities. The path forward is fraught with challenges, but the potential rewards are equally significant. Will the government seize the moment, or will it let this golden opportunity slip through its fingers? The answer will shape not only the mining sector but also the broader economic landscape of Armenia for years to come.
