Expert: Sabotage against Lydian Armenia poses investment risks

ArmInfo. Illegal blockade of roads to Amulsar is not only fraught with environmental, social, economic consequences, but also poses risks that can seriously damage Armenia's investment rating. Lydian Armenia's Social Sustainability Manager Nara Ghazaryan expressed this opinion in a conversation with ArmInfo when asked to comment on the situation related to blockade of the road to the field, undertaken by a number of green activists.

''There is a law in accordance with which we carry out our activities. And now, when we are at the final stage, when 70-80% of the work has been done, we face such kind of sabotage, and the authorities are not taking concrete steps to resolve the problem. I'm not an expert, and I can not operate with indicators, but I believe that the situation related to Amulsar will affect the country's investment rating. Such an attitude to investors is unacceptable, "she stressed.

In this regard, the expert referred to the recent statement made by US Ambassador Extraordinary and Plenipotentiary to Armenia Richard Mills, who stressed that US investors are not ready to implement major projects in Armenia until they are assured that the incumbent government will find solutions also in the situation with Amulsar.

The expert continued that for the international community participation in the Amulsar project of such authoritative structures as the European Bank for Reconstruction and Development (EBRD) and IFC, participating in the project at the initial stage, indicates that Lydian Armenia is guided in its work by the best world standards. "Considering the abovementioned, and the fact that Lydian Armenia carries out its activities within the law, it is unacceptable that operation of other fields continues uninterruptedly. For any investor it becomes obvious that unequal rules of the game are applied to the company, " Ghazaryan stated.

Returning to the issue of economic indicators, the expert noted that the company loses about $ 500,000 daily because of  idle period at the field not considering the wages: "If the government does not take concrete steps to stop this sabotage, the company will have  to dismiss certain local employees whose average salary is about 300 thousand drams. " In particular, Ghazaryan noted that 32% of the total number of employees, which at the time of the blockade of roads made 1,313 people, are residents of local communities - Jermuk, Gndevaz, Saravan and Gorayk. And in case people lose their jobs, influx of financing into families will stop, which in turn will lead to a new migration wave. "The situation has a significant multiplier effect. This should be a serious alarm for the government to take certain steps in time to avoid deterioration of economic figures. "

Concerning purchases Ghazaryan informed that in the period from March 2017 until May 2018  contractor companies in local communities alone, mainly from Jermuk and Gndevaz, made purchases amounting $ 2.1 million. ''The main consumable items of contractors are fuel, food, housing and transport services.  Considering that the population of the communities total 6.5 thousand - 7 thousand citizens, these are quite good indicators, "she stressed.

In addition, because of the current situation businesses in the communities, supported by Lydian Armenia suffer. In this regard, she noted that, as part of the previously announced tender, the company assisted the development of small business, in particular, launch of production of stationery, which was purchased by Lydian. The monthly revenue was about $ 1.4 thousand. Another business in Saravan to provide transportation services, according to Ghazaryan, may suffer because the company organized the transportation of employees from Saravan and Gorayk to the field. And there are a lot of such examples, because over the past two years Lydian Armenia has provided assistance to 54 small business enterprises in 4 communities.

According to the expert, the situation has reached a critical point, as the government has not yet proposed concrete plans for resolving the situation, although several letters have already been sent to the government by the company and community residents. Moreover, according to Ghazaryan, delaying the decision of the issue by the government is causing concerns of the residents as well.

"The situation becomes critical in terms of perception as well. People are very concerned, because there is no order. They call us, asking how they can help. A group of citizens who blocked the roads, intends to act aggressively, anarchy reigns. This makes negative impact not only on the company, but the state as a whole. We even proposed that the National Security Service be involved in this matter, let it conduct appropriate checks. I do not remember any company that would have made such a statement, "she stressed.  In conclusion, Ghazaryan expressed hope that the authorities realize the seriousness of the issue and will take the necessary steps. There can not be further delay, risks can lead to escalation. The situation is indeed becoming more serious, "she summed up.

To recall, Lydian Armenia is a subsidiary of the British Lydian International, whose shareholders are also large international institutional  investors from the United States, Great Britain and a   number of  European countries, including IFC and EBRD. The Amulsar   project is  the largest industrial project in Armenia for the   development of the  Amulsar gold deposit at a total cost of $ 370   million.  In August  2016, a project for the construction and   development of the field was launched. Preliminary work has been   carried out since 2006.  The life  of the Amulsar deposit will be 10   years and 4 months, an annual  average of 200,000 ounces of gold   (about 10 million tons of ore) is  planned. The company's shares are   quoted on the Toronto Stock  Exchange.  Amulsar deposit is the second  largest in Armenia.