UK spent years lobbying for Armenian goldmine; Now Russia is funding it

PanARMENIAN.Net - A Russian-backed development bank is set to finance a mining project in Armenia which has been lobbied for heavily by the UK Foreign, Commonwealth and Development Office (FCDO), openDemocracy reports.

The Eurasian Development Bank (EDB), in which Russia holds a 44% interest, is now committed to investing $100m in the Amulsar gold mine in Armenia – which the UK has closely supported over the past decade.

The breakthrough deal comes after the UK has spent the past 12 months attempting to cut off the Russian state’s access to the international finance system via sanctions.

The UK FCDO has long supported the company behind Amulsar, Lydian International, apparently seeing the mine as a flagship Western investment as well as a chance to improve its environmental and social impacts. Lydian was originally registered in Jersey, and headquartered in the US and Canada.

Together with the UK-backed European Bank of Reconstruction and Development (EBRD), the FCDO supported Lydian as the company navigated a series of crises in its relationship with the Armenian government and society over the past 10 years, according to documents obtained by openDemocracy.

Emails released to openDemocracy under freedom of information law show the UK FCDO, and the UK embassy in Yerevan, lobbied the Armenian government to advance Lydian International’s interests as it faced direct fallout from the country’s 2018 ‘Velvet Revolution’.

That year, protesters and local residents blockaded the $400m Western-backed mining project in the weeks after Armenia’s ‘old regime’ was pushed out of power. Neighbours and protesters said that, under the previous repressive Serzh Sargsyan regime, they had felt like they couldn’t campaign against the Amulsar project.

Citing concerns over the gold mine’s environmental and social impacts, protesters provoked, with their blockade, a serious conflict between the Armenian government and the company set to be the country’s biggest international investor.

Lydian threatened international arbitration over the government’s failure to clear protesters’ blockade at Amulsar. The mine, once online, had been projected to become one of the top contributors of taxes to the Armenian state, creating thousands of jobs.

Yet the protesters’ blockade, alongside government investigations and environmental audits, eventually resulted in Lydian going through a court-protected restructuring process in Canada in 2019-2020. The company said it had simply lost too much money as it sought to regain access to the blockaded mine and complete construction – causing it to default to its major creditors, bankruptcy documents show.

Now, the mine project – once financed by the EBRD – is set to receive $100m in loans from the Eurasian Development Bank (EDB) as part of a fresh push to bring the project online. The EDB has said it is currently ‘boosting its portfolio’ in Armenia, to which it is now paying special attention.

Prior to the blockade, the mine was believed to be near completion. It now requires a further 18 months of construction work, Lydian says.