Armenia: Lydian Intl3-01/Gndevaz and Jermuk

Date Filed
16 Apr 2014
Status
Closed
Phase
Compliance
Country
Armenia

Case Tracker

Eligibility
Eligibility
Assessment
Transferred
Assessment
Dispute Resolution
Compliance
Appraisal
Investigation
Monitoring
Closed
Closed
CURRENT Status
Closed (COMPLIANCE)

Complaint Overview

Complainant

Members of Gndevaz and Jermuk villages and Local NGOs

Concerns

Water pollution, biodiversity, violation of national laws and PS

Cross-Cutting Issues
Risk Management Resource Efficiency Community Health and Safety Biodiversity Land Water

Project Information

Region
Europe & Central Asia
Institution
IFC
Name & Number
Lydian Inlt 3 27657
Company
Lydian International
Sector
Mining, Oil, Gas and Chemicals
Department
Infrastructure
Category
B
Commitment

US$16 million in stages since 2007

Synopsis

Complaint

In April 2014, a complaint was submitted to CAO by two residents of the Gndevaz and Jermuk villages in Armenia with support from nine NGOs with regard to IFC's investment in Lydian International Limited, a junior mining company sponsoring the exploration of the Amulsar gold project.

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 complainants highlight concerns about project impacts on the local water basins' quality, red-listed species and a local tourism center. Other issues raised include criticisms of the EIA conducted and alleged violations of IFC’s Performance Standards and national regulations.

CAO Action

CAO found the complaint eligible for further assessment in April 2014. During the assessment, CAO held several informational sessions with the parties where clarity on CAO’s mandate, functions and services was provided. Ultimately, the complainants informed CAO that they believe their interests and those of the Armenian public would be best served by a compliance process. Hence, in accordance with CAO’s Operational Guidelines, the complaint has been referred to CAO’s Compliance function for appraisal of IFC’s environmental and social due diligence with regard to the project.

In April 2015, CAO completed a compliance appraisal with regard to the Lydian 01 complaint. On the basis of the compliance appraisal, CAO decided to conduct a compliance investigation into IFC's investment in Lydian International Ltd. In October 2015, the case was merged with the Lydian-02 complaint for the purpose of the compliance investigation.

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 released a public response to CAO’s investigation on July 19, 2017.

In October 2018, CAO released a monitoring and closure report regarding the two Lydian cases. Overall, CAO’s monitoring found that IFC’s response to CAO’s compliance investigation has only partially addressed the findings at systems-level and has not addressed the project-level findings. Nevertheless, CAO has decided to close the case considering that IFC has no ongoing investment in the company, and in light of IFC’s decision not to engage in a project-level response with its former client or the complainants.

Status

CAO released a compliance monitoring and closure report on October 5, 2018 which closes both the complaints to CAO regarding IFC’s investment in Lydian.

All documents pertaining to this case, including CAO's compliance appraisal, investigation, and monitoring reports, can be found via the "View Documents" link below. 

Status as of October 5, 2018

Case Documents

  • Dispute Resolution

    Complaint
    Complaint regarding Lydian Amulsar project
    Apr 16, 2014
    English
    Complaint regarding Lydian Amulsar project
    Assessment Report(s)
    Lydian-01 Assessment Report
    Dec 01, 2014
    English
    Lydian-01 Assessment Report
    Lydian-01 Assessment Report
    Dec 11, 2014
    Armenian
    Lydian-01 Assessment Report
    IFC Formal Response
    Dec 04, 2014
    English
    IFC Formal Response
  • Appraisal Report(s)
    CAO Compliance Appraisal Report
    Apr 27, 2015
    English
    CAO Compliance Appraisal Report
    CAO Compliance Appraisal Report
    Apr 27, 2015
    Armenian
    CAO Compliance Appraisal Report
    Audit Report(s)
    CAO Compliance Investigation Report
    Jun 19, 2017
    English
    CAO Compliance Investigation Report
    CAO Compliance Investigation Report
    Jun 19, 2017
    Armenian
    CAO Compliance Investigation Report
    IFC's Management Response to CAO Investigation Report
    Jul 19, 2017
    English
    IFC's Management Response to CAO Investigation Report
    Terms of Reference for CAO compliance investigation
    Jan 08, 2016
    English
    Terms of Reference for CAO compliance investigation
    Terms of Reference for CAO compliance investigation
    Jan 08, 2016
    Armenian
    Terms of Reference for CAO compliance investigation
    Monitoring Report(s)
    CAO Compliance Monitoring Report
    Oct 01, 2018
    English
    CAO Compliance Monitoring Report
    CAO Compliance Monitoring Report
    Oct 01, 2018
    Armenian
    CAO Compliance Monitoring Report