MAC: Mines and Communities

Russian bank delays Armenian mine funding following citizens' protest

Published by MAC on 2010-10-10
Source: Azatutyun

Citizens' protests against a Russian bank 's investment in a northern Armenia mine seems to have worked - at least for the time being.

See previous story : Environmental activists picket bank over mining project, Armenia

Russian Bank Delays Funding For Armenian Mining Project

By Naira Bulghadarian

28 September 2010

In an apparent response to continuing protests from Armenian environmentalists, a major Russian commercial bank put on hold its plans to finance a controversial mining project in northern Armenia.

The country's leading environment protection groups and other non-governmental organizations have for years been campaigning against plans by the Armenian Copper Program (ACP) mining company to develop a massive copper and molybdenum deposit in the Lori region. The Teghut deposit is estimated to contain 1.6 million tons of copper and about 100,000 tons of molybdenum.

The project, if implemented, will lead to the destruction of 357 hectares of rich forest, including 128,000 trees. Critics say that would wreak further havoc on Armenia's green areas that have already shrunk dramatically since the 1990s.

ACP has pledged to offset the heavy environmental cost of the project with 1,400 new jobs to be created in the unemployment-stricken area. The company has also promised to build new schools and make other investments in the local infrastructure.

One of Russia's largest banks, VTB agreed in principle to finance the project's implementation shortly after it was cleared by the Armenian government in 2007. However, the subsequent global recession forced VTB to delay the release of a $280 million loan to ACP. The Liechtenstein-registered company hopes to receive it this year.

According to ACP's chief executive, Gagik Arzumanian, the Russian bank has made the loan's disbursement conditional on an independent study of the environmental impact of the Teghut forest's destruction. "One of the main conditions that have been strictly set by the bank is that we must prove the environmental viability of the project," he told RFE/RL's Armenian service. "International experts are now conducting a study."

Arzumanian did not specify the experts' affiliation and who selected them, saying only that they will unveil their findings in two months' time. He was confident that they will give the green light to VTB.

The project assessment revealed by Arzumanian followed an angry demonstration staged by Armenian environmental activists outside the head office of VTB's Armenian subsidiary. About two dozen of them clashes with police after blocking the entrance to the building in central Yerevan in late July.

The environmentalists also picketed the Yerevan office of the European Bank for Reconstruction and Development in protest against its plans to lend $10 million to the VTB-Armenia bank.

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