PensionDanmark, a Danish investment agency, has decided to withdraw a $62mn investment in Armenia's second largest copper mine because its owner failed to comply with environmental standards, the local edition of Radio Free Europe/ Radio Liberty (RFE/RL) reported on October 26.

Mining of gold, copper and non-precious metals provides Armenia's largest source of exports and it is an important driver of GDP growth for the country. However, it is unclear whether all the mining projects in Armenia are in compliance with national environmental standards. The mine in which PensionDanmark was to invest, located in the northern Lori province, is operated by Armenia-based Vallex Group and is open-pit.

Civil society has strongly opposed the exploration project on environmental grounds, citing the fact that the mine was to destroy hundreds of hectares of forests. In response, Vallex Group vowed to plant a bigger forest in an adjacent area and denied claims that its operations would pollute water streams.

PensionDanmark was financing the project through Russia's state-owned bank VTB, but made its loans contingent upon the project meeting the World Bank's guidelines on environmental and social sustainability.

The Danish Export Credit Agency (EKF) decided that the project did not meet said standards. According to Anette Eberhard, EKF CEO, "this decision is the culmination of a lengthy process in which we have been forced on multiple occasions to reprimand the mine".

When contacted by RFE/RL, Vallex Group said that it had never signed an agreement with EKF, therefore it would not comment on the decision.