Cost-Benefit Analysis of Mining in Armenia

Mining practices in RA have put considerable stress on the environment. Mining has contributed to rapid deforestation in the country. Between the 1990s and today, the area covered by forests has dropped from 20% to around 7%. The World Bank calculates that at the current rate, RA might lose all of its forests by 2030 (Wallace 2012). In turn, the loss of forests causes the extinction of endangered species and the loss of rare plants. It will also lead to landslides that pose a direct threat to peoples’ lives, taking into account that many mining sites and villages are located in close proximity to RA’s mountainous areas. Mining also leads to a loss of arable land, depriving many farmers of their means of subsistence. Mining therefore especially hurts the already impoverished population of RA’s rural areas (U1+ 2014).

As much as the loss of arable land is regrettable, the mine tailings pose a more direct environmental threat to human and non-human lives as well as valuable ecosystems. Tailings consist of materials that are left over from the processing of ore in which the valuable components are removed. This process involves two stages. During the first stage, rocks are removed to extract the ore. Once the ore is extracted, remaining rock is separated from the valuable ore through the use of pressure, water, and/or chemicals. Mining therefore produces two types of waste— weakly contaminated rocks and the highly contaminated tailings. The latter requires special and expensive treatment in which the material is gathered in insulated ponds that prevent any leaks of the tailings into the environment. In RA, leakages are frequent because the ponds are usually unsafe. Furthermore, ore is often smelted near the extraction site to avoid transportation costs. The smelting of ore releases toxins into the air. Toxins from smelting operations can lead to cardiovascular and kidney problems, complications during pregnancy, cancer, and a myriad of other adverse health effects (United States Environmental Protection Agency 1992). Villages located close to these smelters are hit hardest, as these toxins can be found in high concentrations in the soil that is used for gardening and farming. It therefore requires sophisticated filtering techniques to minimize this air pollution (Mining Facts n.d.). In RA, mining and smelting proceed without any significant environmental precaution. Tailings are dumped into porous and instable ponds. Toxic material therefore regularly leaks into the ground, poisoning the groundwater, rivers, and lakes. Used for irrigation, poisonous water enters the food chain. Moreover, smelters either do not use any advanced filters or do not use any filters at all. Most filters were removed and sold as scrap metal when smelters closed down in the wake of a severe economic recession following the collapse of the Soviet Union. When the smelters were reactivated, no new filters were installed (Siebert 2013). The amount of toxins released into the air, ground, and water is very difficult to assess because the mining companies do not gather and release data. We therefore can only rely on environmental studies that target specific areas in RA. During a research project that the Acopian Center for the Environment, the Blacksmith Institute, and the RA government conducted in 2013, soil samples from 25 mining sites across

five regions were gathered. The samples revealed heavy metal concentrations that were well above internationally accepted limits. “Tailing ponds in these mining communities were in a neglected state with no proper fencing and no systematic or adequate monitoring. In addition, these locations had reported many cases of accidents that had resulted in leakage of the toxic pollutants” (Ishkanian 2013).

Since tailings pollute rivers that cross international borders, environmentally unsafe mining practices in RA also negatively affect neighbouring countries, namely Georgia and Azerbaijan. Transboundary pollution adds fuel to the already unstable geopolitical situation in the South Caucasus that has witnessed numerous wars since the disintegration of the Soviet Union in 1991 (Armenia-Canada Chamber of Commerce 2011). Mining-related environmental pollution in RA must therefore be considered a threat to peace and security in the South Caucasus.

The RA government and the mining industry point out that the economic gains from mining are substantial: “In Armenia the mining sector is a key contributor to the national economy. Ore concentrates and metals produced in Armenia account for over half of our country’s exports, making the mining industry Armenia’s most important economic driver” (Armenia-Canada Chamber of Commerce 2011). Indeed, mining is the biggest recipient of foreign direct investment in RA (USAID 2013). It also creates jobs in impoverished rural areas of the country. At the same time, the economic benefits of mining are not clear-cut. According to official government statistics, mining employs just around 1% of RA’s workforce. The reason for this low number is that the ore is usually shipped to Western countries for further processing which is more work-intensive. Mining also accounts for just 3% of RA’s GDP. Furthermore, gains from mining in RA are highly concentrated, benefiting primarily foreign companies and Armenian oligarchs (AUA Newsroom 2013). Finally, due to its geographical spread and environmental burden, mining imposes high costs on other economic sectors such as agriculture and tourism. These sectors could potentially contribute to sustainable economic growth, whereas mining relies on finite resources.

The net beneficiaries of mining in RA are foreign companies, Armenian oligarchs and the few thousand people employed in the

mining industry. The losers are the people who live in close proximity to the mines and smelters. Environmental pollution directly threatens the health of these people who live primarily in rural communities. Yet the toxic material released by Armenian mines travels beyond this, reaching people hundreds of kilometres away, through the air, water streams, and the food chain. In general, due to its socio-economic and environmental consequences, mining in RA is a threat to domestic and regional security.

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