Seven Mining Companies Appealed Decrees by RA TAI Minister on Suspension of Soil Management Rights

Seven Mining Companies Appealed Decrees by RA TAI Minister on Suspension of Soil Management Rights

7 mining companies have appealed the decrees of RA Minister of Territorial Administration and Infrastructure (TAI) on termination of soil management rights. These companies are as follows: "Paramount Gold Mining" CJSC, "Fortune Resources" LLC, "Molybdenum World" LLC, "Vardani Zartonq" LLC, "Marjan Mining Company" LLC, "Mego Gold" LLC,  and "Vayq Gold" LLC, as we learn from the document entitled "Information on Mineral Extraction Activities" published by TAI in January 2021.

"Paramount Gold Mining CJSC owned the right of soil management of Lusajur site of Meghadzor gold mine in Kotayk Region, Armenia. The mine was to be developed by 2035. However, the mining operations were not carried out. By the decree No. 1074-A of RA TAI Minister dated on 07.08.2020, soil management right of "Paramount Gold Mining" CJSC ՇԱԹՎ29/169 issued on 12.06.2012.

The decree was based on the fact that the Company did not sign a land use agreement with the community until July 2020, as an entity having been issued the right of the extraction of natural resources, did not carry out mineral extraction activities in accordance with the terms of the mining contract and draft, as well as the entity did not ensure compliance with the requirements of the mineral extraction project.

"Fortune Resources" LLC owned the right to soil management of Hrazdan iron mine in Kotayk Region, Armenia. The mine was to be developed by 2032. The mine was not developed as a result of a major public demonstrationsdue to the expiration of the documents permitting the development of the mine, and the prospecting of the mine resources by the company.

"Molybdenum World" LLC owned the right to soil management of Dastakert copper-molybdenum mine in RA Syunik Region. The mine was to be developed by 2021. The mine has not been developed.

Molybdenum World's soil management rights have been terminated on the grounds that the Company has not taken sufficient steps to enter into a land use agreement within a reasonable time, as well as the fluctuations in the prices of minerals in the market and subsequently the fact that the soil management becomes economically inefficient cannot be considered as a force majeure as laid down in Article 30 (5 (3)) of Subsoil Code and Clause 8 of the Agreement.

"Vardani Zartonq" LLC had the right to soil management of Sofi-Bina gold-polymetallic mine in the Vayots Dzor Region, Armenia. The mine was to be developed by 2026. There was no development.

In the course of the administrative proceedings, TAI Ministry considered the fact to be confirmed that the company had not taken any action to extract the minerals. The Company's arguments regarding the issues of concluding a land use contract were not considered to be a force-majeure.

The Ministry terminated the soil management right of "Vardan Zartonq" LLC due to non-fulfillment of soil management contract clauses of the Subsoil Code (http://www.mtad.am/files/legislation/665.pdf).

"Marjan Mining Company" LLC owned the soil management right of Marjan gold-polymetallic mine (central precincts) in Syunik Region, Armenia. The mine was supposed to be developed by 2033, but it was not developed.

TAI Ministry substantiated the decision to terminate the soil management right of "Marjan Mining Company" LLC as follows: "The company did not eliminate the grounds for the warning within the statutory period, did not inform the authorized body about the impossibility of eliminating them, submitting documents proving the impossibility of eliminating the grounds for the warning within 90 days. Thus, assessing all the evidence in the case on the basis of a comprehensive, complete and objective examination, the fact of a violation by the Company is considered as confirmed and pursuant to Article 30 (5(3)) of Subsoil Code, the Company's soil management right is subject to termination.

"Mego Gold" LLC owned the soil management right of the Central section of Tukhmanuk gold mine in Aragatsotn Region, Armenia. The mine was to be developed by 2040.

By the ruling of Court of General Jurisdiction of Kentron and Nork-Marash Administrative Districts of Yerevan City, which entered into force on 16.12.2016, "Mego Gold" LLC was declared as bankrupt in satisfaction of the claim filed by State Revenue Committee. The company appealed this ruling. On July 4, 2017, RA Civil Court of Appeal upheld the Company's appeal and overturned ruling  No. EKD/ ​​0339/04/16 dated on 16.12.2016 reached by Court of General Jurisdiction of Kentron and Nork-Marash Administrative Districts of Yerevan City.

During these years, various court proceedings have been held: appeals against verdicts, approval/ correction of the list of creditors, appeal proceedings and the judge of RA Bankruptcy Court, reviewing all the materials of the bankruptcy case of "Mego-Gold" Limited Liability Company, in its ruling dated on 19.12.2019 started liquidation proceedings of bankrupt “Mego Gold” Limited Liability Company.

By decree of RA TAI Minister No. 693-A dated on 13.12.2019, the contract of "Mego Gold" LLC of soil management right SHATV-29/184 issued on 28.12.2012 to central site of Tukhmanuk gold mine in Aragatsotn Region, was terminated.

"Vayq Gold" LLC received development permit SHAT-29/371 for Azatek gold-polymetallic mine located in Vayots Dzor Region, Armenia, in 2012, according to which the term of the mine was set until 23.11.2037.

By the decree of TAI Minister No. 441-A dated on October 2, 2019, as well as by order No. 711-A dated on December 19, 2019, "Vayq Gold" LLC was deprived of the right of soil management.

On February 17, 2020, “Vayq Gold” LLC filed a lawsuit in RA Administrative Court against the Ministry, demanding that the Ministry annuls its decree. The lawsuit was filed in 2020, accepted into proceedings on February 21. The case is unfinished. The next court hearing is scheduled for May 6, 2021.

Besides, since November 2018, a criminal case has been initiated against "Vayq Gold" LLC based on the results of the inspections of RA Environmental Protection and Mining Inspection Body in RA General Prosecutor's Office. According to the inspections, the Company extracted 1,330 tons of ore at the mine in December 2017, without having a project subject to state expertise without proper procedure, in violation of the rules of subsoil use and protection.

This material has been prepared within “Liability of Non-operating Mining Companies in EITI Process” project impletmened by EcoLur with the USAID support within the frames of “Engaged Citizenry for Responsible Governance” project implemented by Transparency International Anticorruption Center.

This article is made possible by the generous support of the American People through the United States Agency for International Development (USAID). The contents of this article are the sole responsibility of the authors and do not necessarily reflect the views of USAID or the United States Government.

March 12, 2021 at 15:12