In July 2020, the European Bank for Reconstruction and Development made it known that it has divested from Lydian and its Amulsar project.
EBRD had been funding Lydian since 2009. In the exploration phase it owned CAD 5.8 million worth of equity shares of the company. Later, EBRD participated in the development of technical and economic justifications of the mining project and in 2016 owned CAD 10.5 million worth shares. And finally, after the approval of the project the bank invested in the mitigation measures of the negative environmental and social impact which included the creation of Jermuk National Park by Lydian right next to the mining site, as well as the illegal transplantation of a Red Listed plant species from Amulsar to Lake Sevan area. As of 2018, EBRD was among the 7 largest shareholders of Lydian International.
The European Bank for Reconstruction and Development is a major financial institution; around 60% of its shares are owned by the EU member states, the European Union and the European Investment Bank. Its headquarters is located in London. The Bank was established by the US and European states in 1991 with the goal of promoting privatisation and supporting business in the post-Soviet countries. The EBRD is a major creditor of governments and private companies; around 1% of Armenia’s sovereign debt is owned by EBRD.
Together with the International Finance Corporation (IFC) which divested from the Amulsar project back in 2017, EBRD has been not only a major financial pillar for Lydian but also its political trustee. The leaders of Lydian have numerously called on to EBRD and its reputation as a guarantor of the “high standards” of the Amulsar project. One can only guess that the colossal engagement of the UK Foreign Office in the Amulsar issue and their frequent meetings with the Government of Armenia on this topic could have been associated with the investments of this bank where large UK capital is involved. Open Democracy website regularly published articles on the involvement of the UK Embassy in Armenia in the Amulsar processes.
Lydian’s long time guardian – EBRD, writes in their website: “Lydian International became insolvent in 2019 at which time it applied for protection from its creditors in Canada allowing it to restructure its business and financial affairs. As part of the insolvency proceedings, a corporate restructuring plan was adopted resulting in the company’s existing senior lenders in Lydian Canada, Lydian UK and Lydian Armenia owning and controlling the assets while Lydian International is subjected to closure proceedings before the competent Jersey court.
As of July 2020, the Amulsar gold deposit is owned by Lydian Ventures of Canada, where the EBRD is not a shareholder. The EBRD remains a shareholder, for now, in Lydian International of Jersey, which has no assets. The lenders will apply to the court in Jersey for it to be wound up.
The Bank invested CAD 11.4 million to purchase shares of Lydian International as part of its capital increase. The funds were used to finance ESMM undertaken as part of the project. The EBRD did not invest in Lydian Ventures and does not have a financial interest in it.”
It is true to state that presently all the main investors have left Lydian. EBRD and IFC have been particularly important because they used to be the political support of Lydian which kept referring to the “high standards” of these financial institutions. The companies involved in the insolvency procedures in Jersey include Caterpillar Financial Services UK and SEK Swedish Export Credit Fund who used to be major equipment suppliers of the project. Lydian’s current owners are hedge funds – Orion Resource Partners, Osisko Mining and Resource Capital Fund. Lydian International, which threatened Armenia with international arbitration (ISDS) no longer exists.
The Armenian Environmental Front believes that the dedicated struggle and resistance of the local communities and environmentalists reached their goal: numerous letters of complaint have been addressed to the EBRD during these years, and 3 times – in 2014, 2017 և 2020, the residents of Jermuk together with environmental organizations sent in official complaints to the Independent project assessment mechanism of the EBRD. In 2014, the complaint was rejected, in 2017 the Bank refused to even consider the application, while in 2020 the complaint was accepted and is now under examination. Hopefully, EBRD will be called accountable for years of support to the project with a potential of causing such immense negative environmental and social impact.
Since 2016, an online petition to divest from the Amulsar project has been collecting signatures, with around 27000 signatures at the moment. The signatories of the petition are not only citizens of Armenia and Diasporan Armenians but also numerous citizens of countries where the investors of Amulsar project are based – UK, USA, Canada, etc. International solidarity played an important role in this victory as dozens of journalists, organizations and many individuals contributed to raising the Amulsar issue in the international media, at their public institutions and on the streets of their cities.
We had previously called on the individual and corporate investors of the Amulsar project, including the Armenian Diaspora Businessmen not to waste their money by investing in Lydian. Many shareholders lost investments because of reckoning to this unpromising project.
At this stage, the Armenian Ministry of Environment needs to revoke its Positive Conclusion on the Environmental Impact Assessment of the Amulsar project, granted to Lydian in 2016 by the former corrupt government of Armenia.
Armenian Environmental Front, civic initiative