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

- As the new CEO of Lydian International what do you see as primary challenges and opportunities for the company and Amulsar project?

- As for any mining company developing a Greenfield project, the opportunity is to build a mine that will benefit all the stakeholders including the host country, the surrounding communities and the Lydian shareholders.

As for specific challenges, last year the company had to move the Heap Leach Facility location because of the government decision restricting the possibility of building the HLF on the previously selected site. This means we had to update the feasibility study and the environmental and social impact assessment that we are working on now. After these works are completed we will proceed with the financing and development of the project and hopefully have the opportunity to build a truly exemplary mine with the most modern environmental management.

- The HLF location and its possible impact on Sevan was one of the outspoken issues for some environmental groups. Does moving the Heap Leach location mean there shouldn’t be any further concerns on behalf of the environmentalists?

- We do not expect that all of their questions and concerns are addressed fully yet. I believe there will continue to be issues that some of the stakeholders will be concerned about. We want to assure everyone that we will listen to all the voices, take all the concerns seriously and aim at answering all of them.  As for this particular issue, we can only reaffirm that we believe the previous location of the Heap Leach Facility was just as safe as is the new one. But we also recognize that some people had concerns which the Government felt it was important to deal with. The Sevan impact zone was expanded and we had to move the infrastructure. Now it is completely out of any, including non-immediate impact zone. However, I want to emphasize that Lydian and Geoteam have already spent over 4 mln USD to get the best international consulting companies to assess all the risks and put all the mitigation measures in the design. Modern Heap Leach facilities operate safely in much more challenging environments and they are designed in a way that has no discharge to the environment during operations and brings down to zero any possibility of major leakage to the natural environment. This is how Heap Leaching works in the US, Canada, Australia and so on. Lydian will be the first to bring this modern technology that doesn’t imply a tailings dump to Armenia.

- Another concern is Jermuk and the Amulsar project’s impact on Jermuk.

- That is an understandable concern. We also understand that plain assurances of safety coming from the company are not enough to address the concerns. That is why preliminary reports on Jermuk that were part of our independent Environmental and Social Impact Assessment were disclosed to the public, though the full ESIA hasn’t been completed yet. The preliminary reports on all concerns including dust, ground waters, noise, etc are available on Geoteam website. This is pure scientific research carried out by International independent consultancies that have over 100 years of experience and strong reputations. Years of research have revealed no potential adverse environmental impact on Jermuk. Let me put it straight. If the studies had indicated any potential of any adverse impact the project would never be able to secure international funding. That’s how international standards in modern mining are implemented. However, we do understand the concerns and are open to further discuss anything that may bother the stakeholders.

- But can a mining project exist next to a resort town?

- Last year Lydian offered the mayors of Amulsar affected communities a trip to some of mines operating next to mineral springs resorts in the US, Colorado, where I come from. They operate safely for decades in the US and benefit these communities economically. There are such examples all over the world- safe and modern mines bringing economic benefits, helping the development of infrastructure and other industries, including tourism. So yes, it is possible and quite doable given modern technologies and opportunities.

- The company management has always assured that the Amulsar project environmental management will be carried out in line with industry best practice. However, considering poor track record of mining industry in the post Soviet countries the concerns are still strong and there is little belief in these assurances.

- That is quite understandable. And the debate on these issues should be welcomed. In fact it is the healthy debate that has raised the bar for the industry in the developed countries. For the developing countries many lending institutions like IFC and EBRD and other banks, that are our shareholders and potential lenders have established a set of rules and guidelines to make sure the projects are carried out in responsible manner. I assume there is some skepticism about the motivations to apply these principles in the developing countries.  But the world is changing and there is more demand for social and environmental responsibility and accountability. The planet is too small to push the problems from one corner of the world to another. So there is a commitment on behalf of major lending organizations as well as many international companies to adhere to all the country’s laws and regulations while applying international best practices to ensure the sustainability of the planet, not just parts of it. Unfortunately in many other cases, where no international standards are involved there are serious issues to address. And those can be addressed by the pressure of the society and by raising the bar for the industries and not only in mining.

- The company has always emphasized the importance of the Amulsar project in terms of bringing Armenia into international investment spotlight. You are new to the company, how attractive you think the project and Armenia is for the investors.

- Even traditional mining destinations like Canada, Australia, Brazil, Chile are putting a lot of effort to attract investments. Exploration is a very costly enterprise that doesn’t always deliver results and not many international investors are willing to invest in unknown destinations. Amulsar project has been very successful in this sense thanks to a lot of effort performed by Lydian presenting Armenia and the project in various conferences and events. Attracting investment also means finding the right balance in meeting investors expectations of the return on their investments and benefitting all stakeholders engaged.

- Is that balance possible?

- That is how successful economies function. As for mining in particular, there are several examples of emerging economies where growth has become possible largely due to favorable investment climate and multiplier effect mining investments have on the economies. Taxes, employment, local land taxes, service contracts to local SMEs all contribute to economic growth. For every direct job in mining 3 to 5 indirect jobs are created. In Amulsar, although the project hasn’t entered the construction or production phase yet, we are already supporting several small and medium businesses locally that provide services such as transportation or supply. This will grow significantly when we start to build the mine, providing  around 1500 jobs during the construction period and around 500 jobs throughout life of the mine. . Another example is the land tax. Last year we have contributed more than 200 m. AMD to the local budgets of Gorayk, Saravan and Gndevaz. No need to emphasize that when Amulsar starts operating the economic impact will be significant not only for the region but for the country as a whole.

- What would you consider success for the project?

- A successful project nowadays is a project with a state-of-the art safety and environmental management, with strong corporate social responsibility performance, a project that is profitable and also exemplary in terms of these indicators. Mining involves so many people; governments, communities, investors, different layers of the society. It is increasingly demanded to meet all these constituencies’ expectations. That is a difficult challenge but a rewarding one. I very much hope that Amulsar will eventually reach that goal. That is what we will be aiming at- a good business project, benefitting the people involved.