RUSSIAN BANK DELAYS FUNDING FOR TEGHUT FOREST MINING PROJECT

Asbarez
Tuesday, September 28th, 2010
YEREVAN

In an apparent response to continuing protests from Armenian
environmentalists, a major Russian commercial bank put on hold its
plans to finance a controversial mining project in northern Armenia.

The country's leading environmental protection groups and other
non-governmental organizations have for years been campaigning against
plans by the Armenian Copper Program (ACP) mining company to develop a
massive copper and molybdenum deposit in the Lori region. The Teghut
deposit is estimated to contain 1.6 million tons of copper and about
100,000 tons of molybdenum.

The project, if implemented, will lead to the destruction of 357
hectares of rich forest, including 128,000 trees. Critics say that
would wreak further havoc on Armenia's green areas that have already
shrunk dramatically since the 1990s.

ACP has pledged to offset the heavy environmental cost of the project
with 1,400 new jobs to be created in the unemployment-stricken area.

The company has also promised to build new schools and make other
investments in the local infrastructure.

One of Russia's largest banks, VTB agreed in principle to finance
the project's implementation shortly after it was cleared by the
Armenian government in 2007. However, the subsequent global recession
forced VTB to delay the release of a $280 million loan to ACP. The
Liechtenstein-registered company hopes to receive it this year.

According to ACP's chief executive, Gagik Arzumanian, the Russian
bank has made the loan's disbursement conditional on an independent
study of the environmental impact of the Teghut forest's destruction.

"One of the main conditions that have been strictly set by the bank
is that we must prove the environmental viability of the project,"
he told RFE/RL's Armenian service. "International experts are now
conducting a study."

Arzumanian did not specify the experts' affiliation and who selected
them, saying only that they will unveil their findings in two months'
time. He was confident that they will give the green light to VTB.

The project assessment revealed by Arzumanian followed an angry
demonstration staged by Armenian environmental activists outside the
head office of VTB's Armenian subsidiary. About two dozen of them
clashed with police after blocking the entrance to the building in
central Yerevan in late July.

The environmentalists also picketed the Yerevan office of the European
Bank for Reconstruction and Development in protest against its plans
to lend $10 million to the VTB-Armenia bank.




From: A. Papazian