VZCZCXRO5054
PP RUEHDBU
DE RUEHYE #1311/01 3050817
ZNY CCCCC ZZH
P 010817Z NOV 07
FM AMEMBASSY YEREVAN
TO RUEHC/SECSTATE WASHDC PRIORITY 6569
INFO RUCNCIS/CIS COLLECTIVE
RUEHUP/AMEMBASSY BUDAPEST 0065

C O N F I D E N T I A L SECTION 01 OF 03 YEREVAN 001311 
 
SIPDIS 
 
SIPDIS 
 
BUDAPEST FOR REGIONAL ESTH OFFICER 
 
E.O. 12958: DECL: 10/01/2017 
TAGS: AM ECON ENV
SUBJECT: MINING ARMENIA'S TEGHUT FOREST - AN INEVITABILITY? 
 
 
Classified By: CDA JOSEPH PENNINGTON.  REASON 1.4 (B/D) 
 
SUMMARY 
 ------- 
¶1. (C) The GOAM is set to approve a much-criticized 
clear-cutting and strip-mining operation in the Teghut 
Forest.  Critics, decrying environmental damage, have 
asserted that the GOAM,s approval process fails to meet 
international commitments, and violates Armenian law. 
Suspicions of official corruption are rampant, and several 
NGOs have indicated that the GOAM has sought to silence 
opposition.  There is a legitimate economic case, however, 
for exploiting the rich copper and molybdenum vein.  End 
Summary. 
 
THE PROJECT 
----------- 
¶2. (C) In June 2006 the Armenian Copper Project (ACP), a 
Russian-owned mining company, announced that it had created a 
new company, Teghut, which would mine the deposit of copper 
and molybdenum in the Teghut Forest in Lori Marz.  The new 
company already employs over 100 persons, mainly geologists 
and scientists, and has begun construction work on logging 
roads and other infrastructure to support the mining 
operation. 
 
¶3. (U) The Teghut deposits are believed to be the 
second-largest in Armenia, following those in Kajaran, and 
are estimated to contain 1.6 million tons of copper and 
99,000 tons of molybdenum.  At current market prices 
($3.65/pound 
for copper, $35/pound for molybdenum), the potential value 
of the metals extracted is nearly $20 billion. 
 
¶4. (C) The project has received strong support from 
government officials.  Former Minister of Nature Protection 
Vardan Ayvazyan said in August 2006 that the GOAM had made a 
strategic decision to support the mining project. Lori Marz 
Governor Henrik Kochinyan claimed that the project would 
create 1,500 new jobs and was quoted as saying "Let there be 
jobs, so people can work instead of starving to death.  What 
does the forest give us?" 
 
¶5. (C) In addition to the Ministry of Nature Projection, the 
project requires approvals from the ministries of Culture and 
Agriculture.  After all agency approvals are made and the 
Environmental Impact Assessment (EIA) is accepted by a 
Ministry of Nature Protection board , the Prime Minister 
makes the final approval.   So far, Agriculture has not yet 
given its approval.  ACP Executive Director Gagik Arzumanyan 
told us that he expects all approvals to be completed within 
about two months. 
 
THE VIEW FROM ENVIRONMENTALISTS 
------------------------------- 
¶6. (C) This project has aroused strong opposition from many 
environmental organizations active in Armenia. Potential 
impacts include not only the clear-cutting of dense forest, 
but the effective leveling of a mountain, the filling in of 
an adjoining valley with waste, and creation of tailing ponds 
containing heavy metals that may threaten groundwater and 
streams.  In addition, this project will likely uproot two 
communities of several hundred persons - mostly subsistence 
farmers.  They point to the devastated landscape around 
Kajaran as an example of what is likely to become of the 
Teghut Forest.  While many critics concede the inevitability 
of the project, they hope to persuade the GOAM to demand 
maximum mitigation measures. 
 
IGNORING ITS OWN RULES 
---------------------- 
¶7. (C) Several NGOs have asserted that the GOAM's approval of 
this project would violate its own treaty commitments.  These 
include the Convention on Biodiversity (Rio, 1992), the UN 
Framework Convention on Climate Change (New York, 1992), the 
Convention on Combating Desertification (Paris, 1994), the 
Convention on Access to Information, Public participation in 
Decisionmaking and to Justice in Environmental Matters 
(Aarchus, 1998), the Convention on Landslides (Florence, 
2004) and the UNESCO Convention on Preservation of the 
Heritage of Art and Nature.  They also claim this project 
violates Articles 10, 31 and 33.2 of the Armenian 
Constitution and several Armenian environmental laws. 
 
ACP STATES ITS CASE 
------------------- 
¶8. (C) Gagik Arzumanyan, Executive Director of ACP, recently 
told us that strip mining is not only the cheapest way to 
extract the copper and molybdenum, but the only way.  The ore 
is located 20 meters below the ground surface and extends 
 
YEREVAN 00001311  002 OF 003 
 
 
down some 600 meters. If ACP employed underground mining 
there would be a 600-meter deep cavity just 20 meters below 
the surface.  A cavity of this depth simply could not be 
supported. 
 
¶9. (C) While acknowledging that strip mining is an inherently 
disruptive  process, Arzumanyan tried to play down the 
project's environmental impact. He said that over the mine's 
lifetime (an estimated 35 years) approximately 375 hectares 
of forest will be clear-cut, with 25,000 cubic meters of wood 
removed.  In the project's first phase - projected to last 12 
years - 157 hectares will be cleared. Arzumanyan noted that 
these numbers pale in comparison to the 500,000 cubic meters 
of wood logged illegally each year in Armenia.  To offset the 
loss of trees, he said that ACP will plant new trees in other 
areas and oversee their care. (Note: Illegal logging 
generally doesn't consist of clear-cutting, and logging of 
Teghut could open up a currently inaccessible area to illegal 
logging, resulting in an even greater loss of forest land. 
End Note). 
 
¶10. (C) With regard to the displacement of local residents 
due to land acquisition for the mine and its operations, 
Arzumanyan indicated that ACP had already purchased most of 
the land required for the project and has fairly compensated 
land owners.  He noted that there remain some holdouts (which 
he characterized as opportunists) who do not wish to sell 
their property - or who seek to sell it for many multiples of 
its market value.  ACP is still trying to acquire this land 
through Armenia,s equivalent of "eminent domain."  He said 
that his company has also purchased another plot of land 
nearby, with which to do land exchanges for persons who would 
like to remain in the area.  He claims the land ACP is 
offering is better-suited to agricultural production. 
 
¶11. (C) Arzumanyan asserted that the Teghut project is in 
compliance with both existing Armenian mining laws and 
international best practices.  He claims that this is the 
most open and transparent mining operation in Armenia, that 
the mine will employ full water treatment and that tailing 
ponds will be dammed to ensure that they do not contaminate 
water sources.  He noted that ACP has published and made 
available to the public all of its plans and environmental 
assessments.  He further claims that ACP encourages open 
dialogue and has made itself accessible to environmental 
groups and experts who are re-assessing ACP's findings or 
conducting independent studies. 
 
¶12. (C) Arzumanian insisted that Teghut is too large a 
mineral deposit to remain unexploited.  He assured that the 
mine will provide numerous jobs (up to 1,700 during 
construction of the site, and about 1,450 during mining 
operations).  As to the employment prospects for local 
residents, Arzumanyan claimed that in the case of ACP's 
Drambon mine (in Nagorno-Karabakh), everybody within 25 km of 
the mine who wanted a job was able to get one. 
 
SILENCING AND CO-OPTING THE OPPOSITION? 
--------------------------------------- 
¶13. (C) Representatives of several environmental groups have 
told us that they or their organizations have been pressured 
by the GOAM to tone down their opposition to this project. 
This may be a response to a successful NGO 
campaign two years ago that led to the re-routing of a road 
through the environmentally-sensitive Shikaho Reserve, and 
supporters of the project within the GOAM may not wish to see 
the NGOs achieve a similar success with Teghut. 
 
¶14. (C) Although not alleged to have done anything illegal, 
the Armenia Copper Project, according to project opponents, 
has been engaged in picking off members of the opposition by 
hiring them as contractors or consultants.  ACP also 
purchased media outlets in the affected regions as part of a 
campaign to  shape opinions in affected communities.  Armenia 
Forests' director noted that he has experienced some staff 
revolt on this project, with his (now former) country 
director actively working against him. 
 
¶15. (C) Affected residents have largely kept silent about the 
project.  NGOs and ACP have both spoken to them - NGOs 
pointing to Kajaran as an example of what might happen to the 
area, and ACP promising jobs and other inducements.  One NGO 
representative also told US that the GOAM has been trying to 
silence affected residents through the closure of a customs 
station near the Georgian border, a place where many 
villagers had been able to sell produce.  With this closure 
they are left without a market, and some NGOs have 
interpreted this as a warning not to speak out against Teghut. 
 
COMMENT 
 
YEREVAN 00001311  003 OF 003 
 
 
------- 
¶16. (C) This is a situation where everybody may be right, but 
where hazards still lurk.  Any mining project will entail 
environmental impacts, and we agree with ACP's Arzumanian 
that a large reserve like Teghut will eventually be 
developed.  While ACP has pledged aggressive mitigation 
measures, the GOAM's reported efforts to suppress or 
intimidate opposition do not inspire confidence.  Despite 
promises of new jobs, endemic corruption in Armenia raises 
the possibility that the benefits from exploiting this 
valuable reserve may go to a relative few, with the 
environmental and health costs spread among the larger 
population. 
PENNINGTON