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Russian Bank Delays Funding Armenian Mining Project

The Alaverdi copper mine in Lori province are similar to the mines planned in Teghut.
The Alaverdi copper mine in Lori province are similar to the mines planned in Teghut.
YEREVAN -- A major Russian bank has put on hold plans to finance a controversial mining project in northern Armenia after protests by environmentalists, RFE/RL's Armenian Service reports.

Armenia's leading environmental protection groups and other nongovernmental organizations have for years been campaigning against plans by the Armenian Copper Program (ACP) mining company to develop a massive copper and molybdenum deposit in the Lori region.

The Teghut deposit is estimated to contain 1.6 million tons of copper and about 100,000 tons of molybdenum.

The project, if implemented, will lead to the destruction of 357 hectares of forest, an estimated 128,000 trees. Critics say that would wreak further havoc on Armenia's green areas that have already shrunk significantly since the 1990s.

ACP has pledged to offset the heavy environmental cost of the project with 1,400 new jobs in an area where unemployment is high. The company has also promised to build schools and make other investments in the local infrastructure.

One of Russia's largest banks, VTB, agreed in principle to finance the project shortly after it was approved by the Armenian government in 2007. But the subsequent global recession forced VTB to delay the release of a $280 million loan to ACP. The Liechtenstein-registered company hopes to receive it this year.

ACP's chief executive, Gagik Arzumanian, said the Russian bank has made the loan's disbursement conditional on an independent study of the environmental impact of the Teghut forest's destruction.

"One of the main conditions that have been strictly set by the bank is that we must prove the environmental viability of the project," he told RFE/RL. "International experts are now conducting a study."

Arzumanian did not specify the experts' affiliation and who selected them, saying only that they will unveil their findings in two months. He was confident that they will give the green light to VTB.

The project assessment revealed by Arzumanian followed an angry demonstration staged by environmental activists outside the head office of VTB's Armenian subsidiary. About two dozen of them clashed with police after blocking the entrance to the building in central Yerevan in late July.

The environmentalists also picketed the Yerevan office of the European Bank for Reconstruction and Development to protest its plans to lend $10 million to the VTB-Armenia bank.