After years of indecision, Armenia appears to be preparing the way to resume development of the controversial Amulsar gold mine project.

On June 18, new amendments in the country’s mining code went into force. Among other things, they allow companies to carry out mining with environmental impact assessments more than a year old, as long as the delay was caused by reasons that include “civil disobedience.”

Development of the Amulsar mine was suspended in 2018 following large protests against the project’s potential environmental damage. Since then its prospects have fallen and risen as the government appeared unable to reconcile the need for investment and jobs in the country with the serious environmental consequences that the mine threatened, and the resulting popular opposition to the project.

The government has not said formally whether it intends to restart the mine project. But activists monitoring it say that all signs point in that direction. 

After parliament passed the law earlier this year, a group of activist organizations appealed to the government to revoke it. “This legislative change is, in fact, a restriction on the constitutional right to hold public meetings, rallies, marches, demonstrations, as well as the right to participate in decision-making,” the February 10 letter read. “It is obvious that the legislative change is primarily related to [the] Amulsar gold quartzite mine development project.”

The activist organizations appealed to President Vahagn Khachaturyan to not sign the law but he did on June 18, saying that experts consulted by his office confirmed that the law was constitutional. 

Amulsar is one of the largest foreign investments in Armenia. The company that operates it, Lydian International, says that it has already invested $300 million in the project and claims that the mine would contribute $488 million to the state budget through taxes and royalties over its 11-year operation, amounting to 1.4 percent of the country’s gross domestic product. 

But many experts and environmentalists believe that the mining process in Amulsar, close to the resort town of Jermuk, will harm the local ecology and could even pollute Lake Sevan, Armenia’s largest source of fresh water. 

As an opposition politician, Nikol Pashinyan also opposed the project, the contract for which had been signed in 2007. When Pashinyan became prime minister following 2018’s “Velvet Revolution,” activists, encouraged by the rise to power of someone they saw as an ally, rallied for a new wave of protests against the mine that summer. The prosecutor general’s office launched a criminal case in August 2018 against the operator of the mine, Lydian Armenia, accusing it of damaging the environment by unauthorized mining operations.

The government commissioned a new audit of the project, arguing that the initial environmental impact assessments were tainted by the close association with Lydian Armenia of the experts who carried them out. When the new audit was released, in August 2019, it largely supported the previous assessments, though it did identify some additional risks. 

Pashinyan initially said the new audit was positive enough to go ahead with the project, but a public backlash forced the government to backtrack and promise that it would produce yet another environmental impact assessment. 

Lydian responded by threatening to sue for damages of up to $2 billion if the government pulled out of the project. Demonstrations began again to gather steam, with clashes between police and protesters in August 2020. A month later, however, the war with Azerbaijan started and the issue largely dropped off the public agenda. 

The criminal case, meanwhile, was terminated in December 2021. No new environmental impact assessment was ever carried out, and the new law means that Amulsar can move forward using the most recent assessment.

Sources in the current and former governments have told Eurasianet, on condition of anonymity, that economic needs in the post-war period have meant the likelihood of the mine reopening has significantly increased. 

Western embassies, in particular the British and American, have long supported the project. United States Ambassador Lynne Tracy visited the mine site in April and “encouraged an expeditious and transparent resolution of outstanding disputes around the project,” the embassy said in a statement. She also “welcomed Lydian’s commitment to upholding the highest international labor and environmental standards and noted the potential for the project to serve as a significant driver of growth for Armenia’s economy.”

Environmental activists disagree. 

“[T]here is abundant evidence of serious violations of a wide range of rights in the development of the Amulsar gold mine, from substantive and procedural environmental rights to social, economic and political rights of affected individuals and communities,” wrote CEE Bankwatch Network, an organization monitoring projects in the region funded by international financial institutions, in a new report.

It recommended that the Armenian government revoke all licenses to operate the mine, initiate an “independent expert assessment of the costs and benefits” of the project, then “take this assessment into account to ensure that negative impacts are duly identified and prevented and that local populations and communities may directly benefit from the project if it is finally pursued.”