By Umberto Bacchi
JERMUK, Armenia, June 6 (Thomson Reuters Foundation) - Tonnes of gold that lie under a snow-capped mountain in Armenia have locked locals and international investors in a bitter land dispute, with the country's new government being watched closely in coming weeks as it tries to resolve the conflict.
For almost a year, protesters worried about potential damage to the environment have blocked access to works to complete a mine that its Anglo-American operator says would generate hundreds of jobs and millions in tax revenue for the state.
But their protests have angered some locals eager for jobs in the remote, mountainous region, with mining firm Lydian International saying it has had to axe more than 1,000 jobs and lost more than $60 million since the blockade began.
With a government-commissioned assessment into the mine's environmental impact expected to be released within weeks, international investors were said to be watching closely to see how Prime Minister Nikol Pashinyan handled the dispute.
"There are more valuable things than gold," said Gagik Margaryan, one of a few dozen residents of the southern town of Jermuk and nearby villages that have taken turns since last June to watch over Amulsar, the mountain overlooking their homes.
The group has set up makeshift checkpoints on unpaved roads leading to extraction and treatment facilities built on the summit's slopes, preventing access by workers.
The protests have divided locals, some of whom say the mine will provide much-needed employment to Jermuk, a town of about 3,000 people, and to rural communities in the area about 170 km (105 miles) southeast of the capital Yerevan.
Minerals and metals make up about half of Armenia's exports and mining accounted for about 3% of the country's economic output in 2017, government data showed.
An environmental impact assessment commissioned by Lydian to get approval to start work in 2016 stated there would be no significant impacts on the environment and local water supplies.
The company, which has invested almost $500 million in the project, said it fulfilled all legal requirements to start work.
Lydian Armenia's managing director Hayk Aloyan warned the dispute was putting more at stake than just his own company's business interests in the former Soviet republic.
"Imagine your biggest investment project is blockaded illegally," he told the Thomson Reuters Foundation in his office in Yerevan.
"It is a huge reputational damage. We are too small a country to have the luxury of damaging our reputation".
Drastic political changes in Armenia last year emboldened protesters to act against the planned mine.
In April 2018 mass protests against corruption and cronyism resulted in a peaceful revolution that propelled journalist-turned-politician Pashinyan to power with his authority as prime minister bolstered by an election win in December.
But the new government has found itself in a quandary, said Richard Giragosian, director at the Regional Studies Centre, a think tank based in Yerevan.
"(The government's) heart is with the environmental protesters, but the economic importance of the mining companies is too big to ignore," he said.
Last November the government commissioned a new independent assessment of the mine's environmental impact, responding to what it said was public demand for full compliance of mining projects with environmental standards.
Results of that assessment are expected over the next month.
Deputy Prime Minister Tigran Avinyan said in emailed comments that mining activity in Amulsar could proceed if the investigation found "the environmental risks are manageable".
Lydian said it would go to arbitration if forced to shut.
The Amulsar gold mine is surrounded by three rivers and two artificial lakes.
One of these, the Kechut reservoir, is connected by a Soviet-era underground tunnel to Lake Sevan, Armenia's largest reservoir and the Caucasus region's biggest body of water.
Mine opponents fear toxic discharge from gold extraction could contaminate water used for drinking and irrigation locally as well as in the Ararat valley, a key food-producing region.
"Amulsar is situated in a very sensitive area," said Arpine Galfayan, an activist with the Armenian Environmental Front.
Lydian said it would implement measures to prevent cyanide, a chemical used to dissolve gold, and other potentially harmful substances from leaking into the environment.
Locals also fear the mine might deter tourists from visiting Jermuk, a spa town renowned for its hot water springs, and could push hotels out of business.
"People who want to recover their health will not come to a place where there are industries with heavy chemical elements involved," said Tigran Margaryan, a Jermuk hotel owner. "This town will become a miners' town."
Lydian said it has invested more than $3 million in social projects, such as local businesses and infrastructure, to mitigate the mine's impact, and it was ready to invest more to establish a natural park.
The company said it would source at least 30% of the mine's 700-strong permanent workforce locally but added most of the roughly 1,400 people hired during construction work had now lost their jobs due to the protests.
"When I started to work for Lydian, I understood what it means to get a salary," said Mkhitar Arshaikyan, a former biology teacher hired by Lydian as an environmental consultant.
Young people struggling to find jobs in farming communities around Jermuk will again be forced to seek employment far from home, he added during a closed-door meeting of mine supporters at an unmarked Lydian office in the city in May.
Yet others feel bargaining their mountain for a mine that would only operate for 16 years was not a good deal.
Samuel Poghosyan, 70, said he decided to protest last spring after dust from the mine covered the green slopes surrounding his house and his kitchen tap started spewing mud.
Construction work had damaged water pipes leading to his village, he said as he sat inside a rusty metal container serving as one of the blockade checkpoints.
Lydian said it had apologised for the incident and that such disruptions would end with construction works.
But the retired factory worker, with a penchant for flowers and books on U.S. capitalism, said he spends at least four days a week at the post to prevent the region's natural beauty from being "annihilated" and would continue even if the government gave the mine the go-ahead.
"This is a paradise land that we received from our ancestors ... and we are obliged to leave it to our future generations at least in the current conditions," he said. (Reporting by Umberto Bacchi @UmbertoBacchi, editing by Astrid Zweynert, Zoe Tabary and Belinda Goldsmith Please credit the Thomson Reuters Foundation, the charitable arm of Thomson Reuters, that covers humanitarian news, women's and LGBT+ rights, human trafficking, property rights, and climate change. Visit http://news.trust.org)
Our Standards: The Thomson Reuters Trust Principles.