EcoLur is launching a series of articles where it presents the findings of its studies on the obligations of mining companies possessing mine development permits but not operating them towards the state and affected communities and their writ of execution, the environmental and social conditions created with the cessation of mining operations.
In this article, we are presenting the activities of "Sagamar" CJSC from this viewpoint, which has the right to soil management of Armanis gold-polymetallic mine in Lori Region.
Under soil management contract PV-093 dated on 20.12.2012 signed between RA Ministry of Energy and Natural Resources and "Sagamar" CJSC, the company was to operate the mine during 2012-2049.
However, the mine has not been operated since 2015. The mine affected enlarged Stepanavan and Urasar settlements in Stepanavan Community. EcoLur interviewed Stepanavan Deputy Community Head Rostom Kocharyan, Chief Specialist-Architect of Stepanavan Municipality Samvel Frangyan and Siranush Meliksetyan, Municipality lawyer about the performance of the obligations undertaken by Sagamar CJSC with its tax and soil management contract towards affected settlements under the conditions of a non-operating mine, as well as about the impact on the social situation of the local population.
Performance of environmental obligations undertaken by "Sagamar" CJSC under soil management contract
Under the soil management contract, “Sagamar” CJSC undertook to protect the subsoil, atmosphere, land, forests, water, as well as buildings and other structures from the harmful effects of soil management works, as well as to restore and improve land areas disturbed due to soil management. In this regard, the representatives of Stepanavan Municipality informed that the company had not performed its environmental obligations under the contract.
The negative impact of the open pit on the environment is obvious. Among those impacts, the representatives of Stepanavan local self-government body mentioned. "... Mining waste was dumped on the trees from the top of the gorge, which flowed to Dzoraget. ... If we go to the mine during or after the rain, you will see the color of the water flowing. The water rich in heavy metals absorbed from mining piles flows through the fields and fills into the Dzoraget.
... Recently we eye witnessed how the water in the Dzoraget changed from bluish water and turned to red. But I cannot explain either where this bluish water came from, how it resulted.
... The pollution of air and soil from the mining area and mine tails continues.
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... The trees and cultivated plants are drying up, the fertility of the lands has decreased....
…30 hectares of pastures are left under mining waste in Urasar settlement only. Not to mention the area of the mine, which are all plough land areas ... 
Before bringing the equipment, they had a tailing dump, now the tails are spread all over the field, where there are also citizen-owned land areas.”
It should be noted that according to the soil management contract, 14,647.0 thousand tons of ore is estimated in Armanis mine, out of which 12316.4 kg of gold, 161.2 tons of silver, 158.6 thousand tons of copper, 381.000 tons of zinc, 178.100 tons of lead, 2358.2 tons of cadmium, 83.0 tons of bismuth, 69.3 tons of selenium, 355.3 thousand tons of sulfur. If to mention about sulfur that it is a source of acid drainage. In the vicinity of Armanis ore processing complex, EcoLur camera captured acid water ponds, acid drainage streams that flow into the gorge, then into the Chknagh River.
Until 2020, “Sagamar” CJSC was not included in RA Law “On Targeted Use of Environmental Fees Paid by Companies”, due to which the community did not make use of the company's environmental fees for the implementation of environmental and health programs.
According to the report by "Sagamar" CJSC published on the official website of the Extractive Industries Transparency Initiative of Armenia (EITI), the company did not pay environmental fees to the state budget in 2016 and 2017. The five-year development program of Stepanavan Community, Lori Region, Armenia for 2017-2021, lays down the unscrupulous attitude of the population and the improper level of control as a problem of environmental protection.
Performance of tax obligations to Stepanavan Community and conflict over change of purpose of land areas for soil management.
Stepanavan Municipality told EcoLur that Sagamar Company continues paying local taxes and fees for land areas and other real estate, as well as movable property, even after the mine is closed.
However, the community has a conflict with the company in the terms that the company uses a significant portion of its own community-owned land areas without changing the purpose of their use. "As a result of not changing the purpose of the land areas only, Stepanavan community suffered a loss of about 200 million AMD," the municipality employee said.
According to our interviewees from Stepanavan Municipality, now Stepanavan community no longer wants the purpose of agricultural lands to be changed, because they want the mine to be closed. "We want to live here in a clean environment. We are demanding the reclamation of the mining area and the landfill area, to restore them to their original appearance,” they said.
According to the report published by "Sagamar" CJSC within the frameworks of the EITI, the company in did not make any financial contributions to the Environmental Protection Fund 2016-2017. The basic amount of money to be allocated to the Fund for "Sagamar" CJSC is set at 46,500,450 AMD, out of which the company had to pay 1,001,440 AMD in 2017, which it hadn’t performed.
Performance of social obligations undertaken by "Sagamar" CJSC under the soil management contract
Stepanavan Deputy Community Head Rostom Kocharyan said that they were not informed about the clauses of the soil management contract, that the company had not fulfilled the social obligations laid down in the contract. He noted that the company made verbal promises to the community during public hearings to implement social programs.
"But they were just promises," the deputy community head said.
“But I should also say that as a result of joint work, a sports school was built in our community, after the earthquake the pillar of Stepan Shahumyan monument was restored, they helped us with the equipment, but did not provide the money laid down in the soil management contract.”
It should be noted that according to the report by "Sagamar" company, the company provided Urasar school with a monitor and a keyboard worth 65010 AMD in 2017, as well as it organized a Christmas event for Urasar and Armanis schools and distributed gifts. This event cost the company 362,613 AMD.
EcoLur sent a letter to "Sagamar" CJSC with the following questions.
"1. For what reasons Armanis gold-polymetallic mine, which is handed over to your company, is not developed?
2. Whether mine re-development is planned, if yes, starting from when?
3. Has the target significance of the land areas used by the Company been changed, if yes, how many hectares for the mine and how many hectares for the company infrastructures?
4. Please, indicate the performance of the obligations undertaken by the company under the soil management contract PV-093 dated on 20.12.2012 to affected Stepanavan and Urasar communities according to the years, as well as the assistance provided within the framework of charitable programs.
5. What measures does the company use to control the outflow of mineral water, in particular the Chknagh River, to prevent and control air pollution and the pollution of the surrounding land areas with tail dumps?”
In response to our inquiry, we received "Sagamar" CJSC General Director Samvel Chobanyan’s letter No. dated 32-20 on 04.08.2020, which says:
"1. In regard to the non-compliance of the declared reserves and contents of the resources laid down in the soil management contract, as well as due to the decrease in international metal prices in the world market up to 2018.
2. The mine has not stopped operating totally, it is true that no extraction is carried out, but at the moment, additional exploration and reserve re-assessment are being carried out, whereas its results will allow drawing up the schedule for our further activities.
3. The target significance of the land areas has been partially changed: in total - 20.64358 ha, out of which 6.0 ha are for soil management and 14.643358 are for industrial use.
4. On its own initiative, in 2017, 2018, and 2019 the Company took measures in the socio-economic sphere of Armanis and Urasar Communities in Stepanavan in the amount of 2,009,388 AMD. During the above-mentioned years, Sagamar CJSC was not engaged in mining activities, the company mainly carried out asset revaluation and maintenance, during which the financial results were negative for three years. In terms of the participation laid down in the soil management contract in the socio-economic programs of the community, the Company, in terms of a certain amount of money, is ready to participate and to implement only after the community submits a proposal to us.
5. There is no outflow of mineral water from the company's territory, in spring-autumn period there are only streams caused by atmospheric precipitation, which are directed to the sedimentation pond, where after partial evaporation, according to the quantitative and qualitative requirements of Maximum Permissible Discharge (MPD) flow to the Chknagh River at a flow rate of 0.8 and 1.1 liters.
"Sagamar" CJSC, if necessary, samples water from the Chknagh River, the last time it was carried out at the beginning of last month, and the findings were compared with the results of the state monitoring posted on the website, no violations were recorded. The location of the tail dumps corresponds to the terms of the project, the risks arising from it are controllable.”
In response to EcoLur's inquiries about the mitigation of environmental pollution in Stepanavan due to the mining industry, as well as the transparency and accountability of “Sagamar” CJSC, Stepanavan residents made various suggestions, in particular:
· Bring all land types to the baseline appearance and reclaim them;
· Carry out tree planting in the administrative territory of the community;
· To compensate the affected citizens and the community for the damage caused;
· To operate all the mines in Armenia in accordance with all the laid down, excluding their harmful effects on the environment and population health;
· To return the mine to the state;
· To organize meetings with the population of the affected communities with the participation of representatives of international organizations interested in the transparency of the mining sector, representatives of relevant state structures, represent the interests of all parties, mutual responsibilities and obligations;
· Regularly to present the company's activities to the residents of the community through easy-to-understand reports and awareness-raising materials;
· Regularly to discuss the implementation of soil management contract clauses;
· To sign soil management contracts in "company-state-community" trilateral format;
· To amend Article 2191 of RA Code on Administrative Offenses to give local self-government bodies the authority to investigate cases of administrative offenses in terms of changing the target significance of land areas in their administrative territories.
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.
August 17, 2020 at 11:18