CAO Cases

Arne Hoel, The World Bank

Europe & Central Asia

Armenia / Lydian Intl3-02/Gndevaz

Complainant
Residents of Gndevaz village
Date Filed
July 25, 2014
Concerns
Livelihoods, environmental contamination, employee healthcare, inadequete project information, insufficient community engagement
Case Status
Open - Compliance
 

Synopsis

Complaint 

In July 2014, CAO received a second complaint regarding IFC's investment in Lydian International Limited, a junior mining company sponsoring the exploration of the Amulsar gold project in Armenia.

According to IFC, the project is at an advanced feasibility stage, subject to completion of a bankable feasibility study, and environmental and social impact studies. Subject to obtaining all outstanding permits, the project is expected to move into the development and construction stage, targeting first gold production in 2016. IFC is a 7.9% shareholder and has invested over $16 million in stages since 2007.

 

The complaint was submitted to CAO by 147 local residents of Gndevaz in Vayots Dzor province raising concerns about project impacts on livelihoods, the environment and on community health.  Specifically, the complaint alleges lack of adequate project information, including information about land acquisition and resettlement plans; potential environmental contamination from the project’s cyanide leaching system; dust pollution affecting fields, livestock and farmland; employee healthcare; and insufficient community engagement.

 

CAO Action

CAO found the complaint eligible for further assessment in August 2014 and conducted assessment visits in October 2014 and January 2015.  During the assessment, the parties chose to engage in a CAO facilitated dispute resolution process. An assessment report with further details was released in February 2015 and can be found at the link below. CAO held separate meetings with complainants and Lydian in February and March 2015, and developed a draft “Agreement to Mediate” together with the parties. Ultimately the Agreement to Mediate was never finalized and signed as shortly after the dispute resolution process began, the complainants’ representatives decided it was no longer in their interest to participate. CAO released the Dispute Resolution Conclusion Report in August 2015 and in accordance with CAO’s Operational Guidelines, the case was transferred to CAO Compliance for appraisal of IFC’s/MIGA’s performance with regard to the project. 

 

In October 2015, CAO released a compliance appraisal and decided to merged the Lydian-02 complaint with CAO's ongoing investigation (Lydian-01).

 

The compliance investigation was released in August 2017.

 

The investigation found that IFC’s pre-investment review was not commensurate to risks associated with the mine’s exploration phase, and a more detailed E&S action plan would have been appropriate. However, an advance in IFC’s supervision of the project after 2013 resulted in a significant improvement in the client’s performance reflected in the development of an exploration phase Environmental and Social Management System, and an international standard Environmental and Social Impact Assessment (ESIA).

 

The investigation found shortcomings in IFC’s supervision of the assessment of impacts on local tourism in the spa town of Jermuk and impacts on the nearby community of Gndevaz. IFC’s supervision related to environmental issues, land acquisition, consultation and stakeholder engagement provided reasonable assurance of compliance with the IFC Performance Standards.

 

IFC has released a public response to CAO’s investigation. CAO will monitor the case and issue a monitoring report within a year.


 

Status

The compliance investigation was released in August 2017, along with IFC's management response.

All documents relating to this case are available under "View Documents" below. 

 

Status as of August 22, 2017


Project information

Institution
IFC
Project Name & Number
Lydian Inlt 3 27657
Department
Infrastructure
Company
Lydian International
Sector
Oil, Gas and Mining
Region
Europe & Central Asia
Country
Armenia
Environmental Category
B
Commitment
US$16 million in stages since 2007

Case Tracker

Ombudsman

  • Eligible: Completed
  • Assessment Period: Completed
  • Facilitating Settlement: Transferred

Compliance

  • Under Appraisal: Completed
  • Under Audit: Completed
  • Monitoring: In Process

Useful Links