Lydian managers and experts answer most frequent questions

03.04.2018 | 09:56 Home / News /
#Lydian
Certain questions about Amulsar project are no longer on the agenda. However, new questions have appeared and some of the previous concerns continue to be circulated.

We present answers to the most frequently asked questions, provided by Lydian senior management team members and experts.

Armen Stepanyan, Director Sustainability at Lydian Armenia   
 
1. Is it possible to carry out mining without impacts on the environment?

Any human activity implies impact, be it tourism, urban development or any other area. It may be surprising for many but the largest impact on biodiversity and water is not caused by mining but by agriculture. 7 million hectares of forest is cut annually for agricultural purposes. Agriculture is responsible for 70% of the consumption of freshwater, most of it inefficient. So, any area has an impact. It all depends on what actions are taken to mitigate or prevent the impacts. Previously mining was one of the poorly managed industries in the world and had received a lot of criticism for its impact on the environment. And that is why in the last 15-20 years the banks and institutions that finance mining projects have come up with a number of standards and regulations that allow for efficient management of risks and mitigation of impacts.

2. What impacts are we talking about? Will there be impact on water quality on the crops of the community land, or people’s health?

No, in case of proper management of the mining project neither water, nor the soil or air quality will be compromised. And of course, impact on people’s health is excluded. Modern mines have no impact on people’s health, otherwise, there would be no mining in developed countries like Norway, Canada or elsewhere. When we speak about acceptable impact or mitigation measures, we do not mean people’s health. Because when it comes to people, there are no “acceptable” limits. By acceptable impacts and mitigation measures, we mean, for example impact on biodiversity. For instance, we have a Red Book species, potentilla porphyrantha plant on Amulsar. Around 20% of it was growing on the open pit area.  So we had to translocate and preserve 20% of these plants in the Sevan Botanical Garden and make a set-aside area where the rest of the species were growing. 2-3 Brown Bears use this area. The mine will take a large part of the natural habitat of these and some other species. And to mitigate and offset these impacts we are investing about USD 6 million to create a National Park in Jermuk to preserve species alike in this area. These are examples of “acceptable” impacts we are going to mitigate against.

3. There are concerns that the water from precipitation will flow through the disturbed areas and become acidic, polluting the water reserves, all the way to Sevan.

The water from precipitation can be managed in a way that it doesn’t impact the water flows of the Amulsar proper, or nearby reservoirs such as Kechut, let alone reach Sevan 40 km away. We understand the skepticism, as we haven’t seen preventive measures being carried out in Armenia before. But modern mining is a technologically advanced industry. We will not be inventing anything new at Amulsar. We will be using management systems that are successfully used elsewhere in the world- from the USA to Australia. In those areas of the Amulsar mine infrastructure, where there may be potential for acid generation, like the barren rock storage facility, water drainage and control systems are built in. Special ponds are being built to capture water that will come to contact with mine infrastructure to prevent it from flowing into the environment and to use it in the process. This will address both an economic and an environmental issue. Besides, part of the barren rock that may have a potential to generate acid, will be incapsulated by non-acid generating material, to mitigate the penetration of precipitation. During all operations, no water will be discharged into the environment without proper treatment. After the closure, we will continue to use passive treatment systems to prevent impact on water for decades and more after the mine closure. These are tested methods that lead to safe operations of dozens of mines from Sweden to Argentina and we are glad to be able to introduce those to the Armenian mining sector.

4. Have you ever spoken about this issue before?

Definitely, we have discussed this issue much earlier than the critics. I doubt that anyone will find any mentioning of “acid rock drainage” (ARD) in the public domain in the previous critique of the mining industry.  In 2015 we published the Amulsar Environmental and Social Impact Assessment and have described in detail how we plan to manage the issue. Only after that we heard concerns in the public domain, that somehow implied that ARD is specific to Amulsar only. Whereas ARD occurs naturally and is specific to almost all mining projects in Armenia and in the world. We are glad that thanks to the Amulsar ESIA people have discovered this common issue in mining that was not being discussed in Armenia before. In fact, due to the fact that Amulsar ore is fully oxidized, ARD in Amulsar if it occurs, will be milder than in many other mines. At the same time, it is at Amulsar that modern management systems are built into the design of the mine during construction, for the first time in Armenia. This can become a good example.   

5. Another concern is the impact on Jermuk springs.

It is important to mention that Amulsar is a separate geological block structure. It has a water system which is independent from Jermuk. A comprehensive isotope study was completed in 2013 demonstrating that the spring water comes from a different aquifer system from that with which the Amulsar project will interact. But this is just for the background information. No contaminants will ever be discharged to the natural environment so not only Jermuk, but any water in the region will not be impacted by mine operations.

John Fourie, Chief Metallurgist at Lydian

6. Cyanide is another concern. Is it possible to use it safely?

Only approximately 6% of industrial cyanide, produced globally, is used by the mining industry. Majority of cyanide is utilized in alternate industries, such as cosmetics manufacture, pharmaceutical production, and fertilizer production.  Cyanide is found in the natural environment, and is present in many plants and fruits – for example, apricot stones. Cyanide does not accumulate in the human body. As a result, if you consume some cyanide by eating almonds, for example, the body will naturally detoxify the cyanide.

Heap leaching is not a new technology, it has been around for more than 50 years. It was developed and first implemented in the USA in the 1960s. Heap leaching is a closed cycle process; wherein dilute cyanide solution is constantly recirculated. The pad is underlined with clay and geomembrane to prevent leakage, and monitoring bores are utilized to constantly monitor water quality and ensure water quality is not adversely affected under any circumstance.

7. How safe is it to place the facility close to the community, how far it should be, what is the regulation?

It is important to mention that Lydian is the first mining company in Armenia to have voluntarily applied to join the International Cyanide Management Code. This is an international initiative that puts strict regulations on its member companies, with regards to cyanide transportation and utilization – specifically in the mining industry. The Code requires regular independent compliance audits. Lydian has recently successfully undergone a pre-operational audit. As for the distance of the facility from communities, the Code does not stipulate a minimum acceptable distance. Technically, the facility can be safely placed at any distance from a community, as long as it is designed and operated in line with the requirements of the Code. In the USA and Australia there are a number of mines that operate in close proximity to communities – some are located less than 1 kilometer from the nearest community. I have worked with cyanide for many years; in a wide variety of processes, ranging from intensive cyanide leaching circuits to heap leaching. Cyanide should be handled cautiously, but like many chemicals, when handled correctly, it can be used safely and without posing danger to persons and the environment.

David Tyler, Mine Technical Manager at Lydian
 
8. They often say that the grade in Amulsar is too low and it is not efficient to operate mines with such a low grade of gold.

The average grade of gold in Amulsar is 0.78 grams per tonne of ore. In developed countries, for example in the US where I come from, there are operating mines with lower grade. Modern technologies allow for efficient extraction from low grade ore. The average grade of new deposits in the world today is around 1 gram per ton. The value of the mine is measured by the ease of recovery, not just by the grade. We will be extracting 10 million tons of ore per year. I can mention some mines in the world with comparable parameters. For example at Cripple Creek and Victor Mine in Colorado, the US, the grade is 0.55 g. p/t. Cortez mine in Nevada, the US, grade is 0.58 g. p/t with production of 23.1 million tons p/y. Eagle Gold project, Canada will produce 10 million t/y with an average grade of 0.78 g p/t.

9. Is the infrastructure tested for seismic risk?

Adequate seismic calculations are included in the mine and infrastructure design. That is the case when building modern mines in countries like Chile and Peru where large earthquakes are relatively common. The facilities at the mine, including the barren rock storage facility, heap leach pad, collection ponds, and process plants, are constructed to provide protection from earthquakes in accordance with international standards of care. The closest fault to the Amulsar Mountain is the Pambak-Sevan-Syunik fault, located approximately 10 km north of the Amulsar gold project. This fault has not generated a significant earthquake in approximately the last 10,000 years. The facility is still designed to withstand a significant earthquake.

10. What will be left after the mine is finished?

20 years ago, mine closure was not such a long and sophisticated process. In recent years, there are more stringent requirements that imply comprehensive mesures to rehabilitate the site. Amulsar closure is planned for over five years. The open pits will be partially backfilled, properly reclaimed and pit walls will be stabilised. The Heap Leach Facility will be cleansed, covered with rocks and topsoil for rehabilitation and revegetation. The same is true for the  barren rock storage facility. All unnecessary infrastructure and buildings will be dismantled and removed if not wanted by the community, and the land will be fully reclaimed and revegetated enabling the land to return to its pre-mining use.

11. There is a belief in Armenia that mining is common only to developing countries, and that is where mining companies seek to mine.

I have more than 30 years of experience in the industry and I have worked in many countries all over the world. Mining is a global industry. Canadian companies mine in the USA, American companies work in Australia, Australian companies have projects in Latin America, etc. There are not too many state run companies in the industry. Mining is a capital-intensive industry and most countries prefer to attract private investments into the sector that will bring in the capital, experience and capacity as well as will bear the financial risk of low commodity markets. Among top mining destinations are countries such as Australia, the USA, Canada, China, Russia, Chile, South Africa, etc. Mining has secured several decades of economic increase in Australia. The same is for Canada. Mining is the backbone of the country’s economy and there are a number of non-Canadian companies working in Canada.

Nara Ghazaryan, Social Sustaniablity Manager at Lydian
 
12. What will the communities and the state gain from the project?

I would separate the direct financial benefits from non-direct. The direct benefits would be for example, the direct jobs. Over 1300 people have been working on the Amulsar construction. We monitor our contactors hiring and in average, about 40% of their workforce have been from our surrounding communities of Gndevaz, Gorayk, Saravan and Jermuk. When we start the production, we expect to have 700 permanent jobs and in 10 years of operations we expect to have at least 30% of our workforce from the surrounding communities, while the rest of the workforce will come from other towns and cities of Armenia. We are paying annual land rent payments to these communities, and they can reinvest this money into the infrastructure: a total of USD 4.2 million since 2008-09. When the mine starts producing we expect to be paying 40-50 million USD in taxes to the state budget annually. Already today Lydian Armenia is the 16th largest taxpayer, due to large-scale construction activities.

13. What will be the benefit of those who do not have jobs with you? People do not necessarily see the benefits of the taxes paid to the state budget.

They benefit from the economic activity a large scale project brings. Every direct job creates 4-6 indirect jobs. For example, all our uniforms are made in a sewing shop that was established and developed thanks to a large client like the Amulsar project. The shop already employs 6 people from the community.  Similarly, a local bakery supported by Lydian, is now hiring 4 women to supply bread to Lydian contractors.  There are many examples like this.  People start new businesses, cleaning services, food supply, etc. By December 2017 our contractors had already reported a total of USD 1.5 million dollars’ worth in local procurement from local  communities. since March 2017. These are huge cash flows into these communities and the economic effect is already tangible.

14. You are also implementing social projects. Is this charity?  

No, this is not charity. We design projects that will have a long-term impact on the economic development of these communities and will help the communities direct the cash flows from the Amulsar project into efficient business projects. We support community investment programs for several reasons. First, we try to help establish businesses that will be both beneficial for the communities and for our project by providing us services and goods and to support local procurement. Second reason is risk reduction and mitigation for any social impact the project might have. For example- if we purchased land from the community members, we are committed to provide alternative livelihoods for them.  We also support activities to make communities attractive for youth (better education, business and other opportunities). And finally, it is in our interest to work with a dynamically developing community and that is another business case for us to finance these projects. In the last 10 years we have invested USD 3,5 million into development activities.  Along with several dozens of small businesses, new horticultural, new crops and animal husbandry technologies were introduced and sustained. We also supported social infrastructure, skills learning, income generation, educational, sport and art initiatives and community health awareness projects. The positive dynamics in these communities is notable. For me and my colleagues this is not only professional achievement, it promotes change and brings high level of emotional satisfaction.
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