Armenia: Lydian Intl3-02/Gndevaz
Residents of Gndevaz village.
Livelihoods, environmental contamination, employee healthcare, inadequete project information, insufficient community engagement
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 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 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.
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 05, 2018