At a discussion held at the Marriott Armenia Hotel on December 2 nd , the Ararat Gold Recovery Company ltd. (AGRC) once again presented its plans for building a gold processing plant near the Sotk mine, twenty kilometers away from Lake Sevan.

This time the management of the company invited the governor of Gegharkunik as well as dozens of administrative heads from the villages near the mines. However the bodyguards of AGRC president Sanjay Dalmia prevented Hakob Sanasaryan, president of the Greens Union of Armenia, from entering the hall before the discussion.

Apparently Dalmia believes that anything is possible in this country, even keeping NGO representatives out of various open discussions on issues of public concern. Last time, during a similar discussion held earlier this year, Mr. Sanasaryan expressed his opposition to the company's plans, considering them illegal and dangerous. The way company management treats members of the general public is reflective of their treatment of their own employees (See also: Is Sterlite Gold Leaving Armenia?). The arrogant behavior of the company president and his bodyguards, all of Indian descent, at this discussion participated by the Ministry of Nature Protection is difficult to understand.

The company explains its plans to proceed with this dangerous endeavor with a use of cyanide in the vicinity of the lake Sevan by a circumstance that the plant processing the ore from Sotk is located in Ararat province, and therefore, it is not economical to transport the ore from Sotk to Ararat. They insist a permission to build a plant in Vardenis to be issued, despite the clear provision in the Law On Lake Sevan prohibiting the construction and operation of any such facility in the lake Sevan basin. Interestingly, a feasibility study from 1999 facilitated by the company, but under an American - Canadian management, showed the project being economical while transporting the ore from Sotk to Ararat. The study, a comprehensive paper with volumes of documents, was prepared by two most reputable firms in the world, USA Snowden, and Candian Kilborn. The study was also submitted and endorsed by Armenian government. The price of gold then was about $320 US per ounce. The study provided AGRC breaking even in case the gold price is $280 US per ounce, and making profit in case the gold price is $300 US per ounce.

Gold price today is over $500 US per ounce, more than $200 US per ounce more than the company needed to break even, while the ore transportation tariffs from Sotk to Ararat remained the same since that time, being $0,0153 per tone/km (about one and a half cents) according to the agreement between the company and the government.

In the circumstance of such unprecedented rise of gold prices in the background of other conditions remaining mostly the same, however, the Indian management of the company runs the project with a loss, and surprisingly, points out to that very phenomena to substantiate its claim to build a plant near lake Sevan. Local experts express serious doubts regarding the real goals behind such behavior of the company's management, pointing out that even the most vulnerable and risky projects are currently run with profits around the world given this level of metal prices. In fact, mining at Sotk and Meghradzor was profitable even during Soviet times, while the two mines are still considered as leading projects in the world mining community, given the reserves, grades and other economic considerations of the projects. Therefore, the company's efforts to gain supper profits on the expense of Armenia's environmental and national security are at least unacceptable.

Earlier this year, an agency within the Ministry of Ecology, Ecological Investigation, gave the company's plans a negative assessment. This should have been enough to put an end to the plans. Furthermore, the law regarding Sevan categorically prohibits the construction of similar structures on the territory of the basin. But Sanjay Dalmia and his Armenian colleagues are once again trying to "sneak" the idea past, insisting that the project presents no threat to the environment. The minister of nature protection, various scientists and ecologists have once again categorically rejected the project.

Anush Gevorgyan, AGRC's representative on ecological issues, informed those present that when their project had first been rejected, they had gotten in touch with a British company, which had made a few constructive suggestions and assessed the project positively, considering it a potential success.

"It is a historical fact, and experience from all over the world has shown as well, that 76 per cent of all industrial accidents are linked to waste storage. For this reason, our waste storage unit is to be located on the other side of the water divide," Gevorgyan explained in an attempt to reassure the audience. Her presentation made it clear that that the company planned to construct its waste storage unit on the banks of the Seydlar River, on the Armenia-Azerbaijan border. Thus, if the waste storage unit were damaged, sodium cyanide and other poisonous material obtained through ore processing would be released into the Seydlar River to reach the Sarsang Reservoir in the Nagorno Karabakh Republic.

Gevorgyan is convinced that no industrial accidents will occur if they do their work properly. "Let's hope nothing goes wrong," she added.

Promises made by company officials do not inspire confidence. AGRC, located in Ararat, has seen up to ten industrial accidents over the past five years. The pipes leading to the tailings dam have burst on a number of occasions releasing cyanide into vegetable gardens and orchards, poisoning cattle and fish. The last such incident, in which a 4,600 square meter vineyard owned by Suren Margaryan was contaminated with cyanide, took place on November 28, 2004.

Company management has dealt with any such incidents on the spot by bribing the victims to keep them from going to court, mainly to avoid the facts of incidents becoming a public knowledge. The company has yet to complete the protective trough around those pipes, and yet it is now promising multi-million dollar investments.

Indeed it was AGRC promise to invest US $80 million and create three thousand jobs that brought leaders from the most poverty-stricken regions of Armenia to Yerevan on December 2nd.

"Doesn't the fact that the new plant will be constructed on the border with Kelbajar pose a potential problem? It's disputed territory after all," asked a correspondent from Radio Liberty. Vardan Vardanyan, the executive director of the company, replied, "There are no documents or common map where any such borders are drawn. We weren't an independent country then to have internationally recognized borders. We were part of the Soviet Union as separate republics, but the borders that separated us were called administrative borders, which are not international in nature. That's the first point. Secondly, the line representing the border may appear to be a narrow line on the map as if drawn by a pencil, but in reality it is a piece of land two kilometers wide. We only need one kilometer-who said that that area is disputed?"

So an Armenian official at a foreign-owned plant is forgetting that causing environmental damage to a neighboring country is prohibited under international law and various international treaties entered by Armenia. Even if the territory is not disputed, but there is a possibility that the dangerous substances may reach the territories of the neighboring countries, the damage to Armenia may be the same or even more. Such statements may cause serious problems for Armenia.

Vardan Vardanian was apparently encouraged by the main shareholder of the company, Indian billionaire and resident of the United Kingdom Anil Agarwal.

Who is Anil Agarwal, and how did Armenia's gold end up in his hands?

Anil Agarwal, born in India, got his start running a small scrap metal business, after which he started to sell copper wires to Indian communication companies, with great success. He moved to London thirty years ago.

to be continued