Mediamax’s interview with Howard Stevenson, President and CEO of Lydian International

- Lydian and its subsidiary Geoteam have received the Mining Right for Amulsar project, which is at this point the largest foreign investment project in Armenia. How will it impact Armenian economy, considering visible economic hardships the country is going through?

- First of all, I want to emphasize that granting of the mining right is a result of deep and comprehensive interactions, consultations and work around the project with all stakeholders, including the Government of Armenia, our local communities, civil society organizations, local and foreign experts. I want to thank all parties for the involvement in discussions and cooperation around the project at different stages.

It is an investment project of estimated US $‌420 million. We estimate to be paying around US$‌ 200 million in salaries during the life of the mine and tens of million dollars in taxes each year. No doubt the economic impact will be tangible for the country and especially for the local communities.

However, what is also important, being the largest foreign investment project, with many reputable banks and investment institutions involved, Amulsar project also presents Armenia as a country welcoming foreign investments. Global economy is competitive these days and attracting investments requires efforts. We hope that the success of Amulsar will eventually translate into the success of Armenia as a new investment destination since we know it has big potential.

- The project approval has been delayed for quite a while, the company had to change project infrastructure, to comply with changes in the law. Are all the necessary permits obtained now and what are the next steps?

- The project infrastructure had to be changed twice to comply with the changes in the law in the last two years. It did result in project delays, however, during this time we closely worked with all stakeholders to make sure the project complies with the new requirements of the law and also to make sure all concerns are addressed. As a result of this cooperation the company was granted all the necessary permits.

We are looking forward to the next important step of actually bringing the promised investments into the country and starting the construction due in spring-summer 2015.

- When and how will the communities feel the impact of the investment and what tangible benefits will Amulsar project offer to them?

- I think the communities have already felt some of the positive social impact of the company activities during the 6 – 7 years of exploration. As you know, the company has already invested in the project around US$‌69 million during the exploration period, creating jobs both in the communities and in Yerevan. Only last year around 1 million USD was paid to the communities in form of land rental fee. Around US$‌ 400 000 is invested annually in community development projects that are aimed at sustainable social development. Schools and kindergartens are being renovated, water and gas supply is being provided, and various agricultural and other development projects continue to be implemented.

The most tangible benefits for the communities of course are yet to come with the start of construction and development of the project. The construction period is expected to generate around 1500 jobs. Around 700 jobs will be created throughout the life of the mine. What is also important in investment projects of this scale is the multiplier effect and indirect jobs created. This means visible economic activity in the region and opportunities for local businesses in the surrounding communities in Vayots Dzor and Syunik.

- Some activists continue to question the possibility of mitigation of environmental impact. Is there necessarily a trade-off between economic development and environmental as well as health and safety issues?

- The concerns are quite understandable. It is difficult to trust a concept like “responsible mining” if the previous experience in the country and in the region was not very positive. Based on my experience of 30 years in countries like Finland, the United States, Australia, and South Africa I can assure that modern technologies give all the opportunities to make sure mining projects as well as any other economic activity reduce environmental footprint, guarantee health and safety of the communities and bring economic benefits.

I don’t think economic development should be chosen over preservation of the environment. Nor the vice-versa is wise. It is about how to make sure both is done right and not at the expense of each other. Economies need to grow, people need jobs, they need good educational system, affordable healthcare, social security and economic development is the only thing that can provide this. This is true not only in case of developing countries like Armenia but also in case of developed countries. That is why as technologies advanced and economies grew, more resources were put into modernizing industries with respect to the environmental issues.

Today countries like Sweden have vibrant mining sector that benefit the economy and at the same time all modern mitigation measures are put into design and maintenance of projects to make sure they are well managed environmentally.

According to a poll in 2013, 90% of Australians have said that mining is important for the economy and around 70% viewed the industry favourably. It takes time and effort and a track record of well managed mining projects to change the perceptions and actually the behaviour of the industry. We hope that Amulsar project will be one of the first steps.

- How do you intend to change perceptions? Is it possible?

- By our everyday responsible approach to our work. Already today we have carried out all our environmental studies with best local and international experts involved and in line with IFC and EBRD standards. We have already invested around US$‌5 million into our environmental studies. According to the mining agreement signed we have committed to contribute more than US$‌ 4 million to the environmental bond to secure mine closure. Several million dollars will be invested in other environmental activities, including rehabilitation, recultivation, monitoring etc. Heap leaching that we are going to implement at Amulsar is a technology widely used in countries like the US, Canada, Australia, Chile, Russia and elsewhere. It leaves no tailings behind and can be done safely and managed effectively. We want to demonstrate that Amulsar will be a world-class mining operation and we believe that perceptions can be changed.

- Lydian will become one of the biggest investors and biggest taxpayers in the country. Given this, do you feel any special responsibility?

- Undoubtedly it is a huge responsibility for the company. We need to make sure that the project benefits all stakeholders - the country, the communities and the investors. It is also a huge social responsibility and I want to emphasize that for our local team in Armenia it is especially important that the project offers tangible and sustainable development to the local communities around Amulsar. I am especially proud of our very professional team of Geologists, Engineers, Environmental, Social and Financial specialists in Armenia who have put enormous knowledge, time and effort into making sure that the project is designed and carried out in a way that benefits Armenia. We are looking forward to fulfilling that promise and that is indeed a huge responsibility.