Mining company Vallex Group, facing a furore over claimed pollution, is to lay off most of its 1,200 employees active in Armenia, it says in an announcement posted on its website.
The Liechtenstein-registered company, which has been exploring for copper and minerals such as molybdenum in an open-pit mine, has been involved in heated disputes with villagers and farmers over the alleged environmental violations. Vallex Group operates two mines in Armenia and one in the disputed breakaway region of Nagorno-Karabakh. Environmental groups have claimed that leaks from a waste dump in the vicinity of one of the mines in Teghut are polluting a nearby river. The company has dismissed the claims as "lies".
Mining, particularly of gold, is Armenia's largest source of export revenues and an important contributor to GDP. However, environmental activists have long complained about the lack of transparency and environmental due diligence in the Armenian mining sector, in which the government has been complicit. Some companies active in the industry are said to be in clear violation of environmental regulations. Furthermore, the mining companies' obligation to conduct multi-stakeholder consultations with the locals living in the vicinity of their mines has not always been conformed to. Companies are said to have either disregarded locals' concerns or failed to consult with them in the first place.
Vallex Group has previously placed some employees on leave, while saying it would not fire anyone and that its intention, after the environmental difficulties were solved, was to increase production. In its latest announcement, however, the company said that it would only retain a small number of staff to guard its premises, maintain its facilities and perform important back-office operations. It could not afford to pay all the staff while production was stalled, it said.
The company specified last year that its plan was to increase copper production at Teghut. Local farmers who cricised its plans said pollution had affected their orchards and that the company had lied to the government. One farmer has sued the company, but the trial has not moved forward for a decade. Meanwhile, villagers were threatening to collect signatures on a petition to have the company's environmental permit revoked, and send it to the prime minister.
Vallex Group's latest annual operating revenue increased by 32% y/y to $358mn thanks to a recovery in global copper prices, the company revealed in its financial report published in January.
Last December, residents of two villages in Armenia protested against plans of a little-known company, Miram, to pursue open-pit gold mining. The mining would take place in a 200-hectare region located in the south of the country, close to the villages of Ardvi and Mghart.
Miram is a company that does not have an online presence, possibly indicating that it is a shell company. The parliamentary leader of the ruling Republican Party, Vahram Baghdasarian, has been linked to the company but has denied any involvement.