Eurasian Development Bank rejects loan for Amulsar mine operations

Armenian Economic Minister Gevorg Papoyan stated that discussions are ongoing with commercial banks in Armenia after the Eurasian Development Bank (EDB) rejected a loan to operate the Amulsar gold mine. This has led to speculation that the EDB’s decision was influenced by the results of the environmental assessment it commissioned as part of its final loan decision.

Papoyan refrained from commenting on the reasons behind the EDB’s decision and instead noted that over the past few years, Armenian banks amassed a large amount of capital, which gives them the opportunity to finance $150 million to operate the mine.

‘A few years ago, this would have been unimaginable, but now this is real and possible,’ Papoyan said, adding that the government intends to take part in the process given the large volume of financing.

‘Moreover, in case of a successful process of the project, it will be possible to start extraction at the beginning of the fourth quarter [2025]’, he said.

Operation of the contested Amulsar gold mine was greenlit in January 2024, after Armenia’s government accepted a 12.5% share in the mine, despite years of protests by eco-activists and residents from communities adjacent to the mine.

[Read more: Armenia greenlights controversial Amulsar gold mine]

The share was agreed upon when Lydian Armenia, the company operating the mine, Armenia’s Economy Ministry, and the EDB signed a memorandum of understanding in February 2023.Advertisements

At the time of the memorandum’s signing, the EDB agreed to extend a loan of $100 million to Lydian Armenia for the construction and operation of the mine ‘in compliance with the best international mining practices and strict adherence to the applicable legislation of the Republic of Armenia, by promoting the local market and employment in affected communities’.

In addition to the EDB loan, another $50 million was intended to be obtained from a local bank, along with $100 million to be raised by Lydian Armenia.

At the end of November, CivilNet wrote about the EDB's failure to provide a loan, noting that the signing of the agreement on the 12.5% share to be donated to the government ‘has been postponed at least five times’.

‘This raised suspicions that there were no results in the search for financial resources for the development of the Amulsar mine’, CivilNet wrote.

Papoyan told CivilNet that the government intended to provide a state guarantee for the company to attract a loan, before which they ordered an audit of Lydian Armenia in order to make ‘a political decision’.

Lydian Armenia did not respond to CivilNet’s questions about attracting a loan from the EDB, while the EDB told CivilNet that Lydian Armenia ‘has withdrawn its application, and all internal procedures of the bank to evaluate the application have been suspended’.

Environmentalist and lawyer Nazeli Vardanyan did not exclude that the EDB’s decision was due to the results of the environmental assessment the bank ordered in May 2023.

‘They understood that the probability of a return [of their investment] is very small because there are both lawsuits and environmental risks that are not managed’, Vardanyan told RFE/RL. She also noted that there are great risks in the potential investment of $150 million by Armenian banks regarding the return of investments.

In 2019, Lydian Armenia filed for bankruptcy protection in Canada, after which it was bought by two US and Canadian equity firms specialising in mining and restructured.

The EDB was established by Russia and Kazakhstan in 2006, and was later joined by four other countries from the Commonwealth of Independent States (CIS), including Armenia. According to the bank, its main focus is on financing projects in member countries.