We already wrote about what worrying outcomes the operation of mining enterprises may entail. We mentioned in the same article that the danger caused to people's health and nature by use of modern technologies and progressive principles can be neutralized or at least minimized.

If it weren't the case, it would be hard to conceive how Sweden, for instance, a country one of the most caring ones to the nature is a major iron exporter and how Australia which is no less caring has been demonstrating an economic growth over past 20 years mainly owing to mining industry. Sweden and Australia stand out from other countries not only by strict regulations of use of natural resources (though it's rather severe indeed) but control over the sphere - high-level of law enforcement which other countries where corruption risks are high can't brag about. So, in conditions of lack of proper level of state control, the companies can easily bypass the demands irrespective of how severe the legislation is.

One of the reports published by Center for Social Responsibility in Mining of University of Queensland in Australia contains a proposal to adopt responsible policy by the mining companies as a way out of the situation - in other words, that is self-regulation which we also wrote about  and which can't be considered as the best alternative to reducing environmental risks as a company may or may not adopt a responsible policy.

As of now, the best solution to the problem is the sectoral approaches used by financial organizations while detecting, identifying, assessing, reducing and managing environmental and social risks during project funding process. The approaches which are advanced by the so-called "Equator Principles" and IFC performance standards are put forward to mining companies as a requirement for funding.

On June 4, 2003, 10 largest banks which had the 80% share of lending in mining industry in emerging markets decided to follow the rules named "Equator Principles" while defining priorities of financial support in various fields of economic activity. As of now, over 70 financial organizations follow the principles.

"Equator Principles" were worked out by a number of private banks such as Citigroup, ABN AMRO, Barclays, WestLB etc. The model of principles was based on the World Bank's environmental standards and IFC's social policy and can be applied while funding projects at more than $10mln.

Upon adopting the "Equator Principles", the banks undertook the responsibility for sustainability of funded projects. If formerly it was solely the borrowers who were entitled to ensure development of environmental and social responsibility, now the banks started figuring out their own role and responsibility for using natural resources rationally.

Besides HSBC Armenia, the Equator Principles are observed in Armenia by the banks which finance projects attracted by international financial structures.

"We can definitely claim that all the projects funded by the financial organizations and banks following "Equator Principles" now stick to certain environmental standards and regulations and the quality of mining has considerably changed in the world in this sense", said Armen Stepanyan, Environmental and Social Manager of British Lydian International and its Armenian subsidiary Geoteam, which is going to operate Amulsar gold mine.

IFC is one of the shareholders of Lydian International and consequently the company's operation is also based on "Equator Principles". The list of Lydian's shareholders includes a number of international banks and financial institutions which signed under the principles, such as European Bank for Reconstruction and Development (EBRD), Royal Bank Canada etc.

According to Armen Stepanyan, the Environmental and Social Impact Assessment (ESIA) of the program should be carried out in accord with the IFC performance standards and EBRD performance requirements so as Amulsar project could be funded by these banks and institutions. "Before funding of the program and after making the decision on financing, IFC and EBRD continue providing permanent control to make sure it's implemented within the best international standards and practice", Armen Stepanyan says.

As we see, not only environmental standards but mechanisms of their control even in conditions of lack of proper level of state control have developed over the past decades.

Ruben Harutyunyan