Position document of the NGO Coalition for “Extractive İndustries Transparency İnitiative”(EITI) on the development of mining deposits in Karabakh

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The Armenian-Azerbaijani Nagorno-Karabakh conflict, Armenia’s military aggression against Azerbaijan, the occupation of Nagorno-Karabakh and 7 surrounding regions (Kalbajar, Lachin, Fizuli, Aghdam, Cabrayil, Gubadli, Zangilan) by Armenians resulted in the natural resources  staying under the control of the occupiers for about 30 years and led to the destruction by the occupiers of all settlements, all the material and spiritual wealth created by the people for a long years.

As a result of the occupation, the precious metals as gold, silver, copper, molybdenum, etc.  were illegally exploited and natural resources were plundered in these areas for 30 years, precious metal resources produced in the occupied territories of Azerbaijan while transported to Armenia, where -after passing a certain stage of purification, was sold in the markets of third countries.

The Vejnali gold deposit located in the territory of Zangilan region belongs to the quartz-gold-sulfide-containing vein geological-industrial type. 25 gold-bearing quartz vein zones were studied in the field, and reserves with C + C2 category have calculated for zones 14, 15, 16, 19, 21 and 24. The Vejnali field was discovered by the Vejnali geological prospecting party in 1959-1962 and in 1984 so was approved by the Local Resources Commission and included in the State Balance of Mineral Resources of the Republic of Azerbaijan. According to the approved reserves: C1 category ore – 183 thousand tons, gold – 2,169 tons; C2 category ore – 433 thousand tons, gold – 4,347 tons. C1 category silver – 0.19 tons; Silver of C2 category – 9.9 tons. C1 category copper – 0.2 thousand tons; C2 category copper – 2,800 tons.

The Zod field (Armenians call it Sotk) is located on the border of the Kalbajar region of Azerbaijan and the Basarkechar (Vardenis) region of Armenia. 70% of its total territory falls on the territory of Azerbaijan and 30% on the territory of Armenia. The field was discovered in 1951 by the Caucasus Red Intelligence Department. Only 7 of the 23 ore vessels of the field are located in Armenia. The field has been operating by the Armenia with the support of former Soviet Union since 1976.

Zod gold mine has mainly gold and silver reserves. According to the latest information released by the Armenian side, the revalued reserves of the Zod gold mine are 31,141 tons of ore, including 133.5 tons of gold and 175.6 tons of silver. Zod gold mining has become one of the most important sectors in the Armenian economy, and according to official data, the Russian company GeoProMining Gold, which operates the gold mine, became the 4th largest taxpayer in Armenia.  The Zod gold mine exported 4,518 kilograms of gold to Switzerland for $ 162 million in 2018, GeoProMining Gold paid $ 32 million in taxes to the state budget of Armenia  in 2019.

The Gizilbulag deposit in the Agdhara region has 13.6 units of gold and 47.9 million tons of copper, the Mehmana field has 37.3 million tons of lead and 40.4 million tons of zinc. The industrial reserves of the iron ore deposit are 100 million tons. There was also the Canyatag-Gulyatag gold deposit in those areas.

In order to explore and exploit the copper and gold deposit (Drmbon) near the village of Heyvali in the Kalbajar region, which is currently under Armenian control,in August 2002 the Armenian company Vallex Group (VALLEX Group) renamed Base Metals.  The Drmbon mining plant, the most successful enterprise, largest producer and taxpayer in occupied Nagorno-Karabakh over the years, initially planned to process 150,000 tons of ore a year, but in 2009-2011 it processed 400,000 tons of ore a year. As a result of the brutal treatment of this field has led to a short period (10 years) of reduced ore production from 30,000 tons to 10,600 tons per month.

Due to the reduction of ore reserves in the Heyvali (Drmbon) field (according to Armenian sources, only 0.4 million tons of the 3.2 million tons of ore discovered in 2014 remained), the search for additional deposits started in December 2011, only one well (today Demirli (Kashen) in the Tartar region has already been identified as a large gold deposit.  Ore production started at the Demirli field on May of 2013,. Regularly, 2,000 tons of ore per day was transported from this field to the Drmbon mining plant. Taking into account the processing of ore from the Demirli field, as a result of the reconstruction work carried out at the Drmbon mining plant, the plant’s production capacity has been doubled – from 350,000 tons to 700,000 tons. At present, the Drmbon mining plant can process 600,000 tons of iron ore (Kashen) and 100,000 tons of Drmbon ore per year. .According to the experimental data of Base Metals, the copper-molybdenum reserves in the fields in Kalbajar and Tartar is allow to build large-scale production.

According to the latest data from Base Metals, proven ore reserves of the Demirli field are estimated at 56 million tons. In this regard, a mining processing plant with a capacity of 1.75 million tons to 3.5 million tons of ore per year was built in Tartar. This means annual copper production of 14-15,000 tons worth more than $ 100 million.

It should be noted that companies belonging to many countries have been operating illegally in the occupied territories of Azerbaijan. As a result of journalistic research, the main extractive companies are private companies owned by citizens of Argentina, Australia, Great Britain, France, Iran, USA, Russia, Switzerland, Germany, the Netherlands, China, Lebanon, Greece, Uruguay, India, Canada and other countries were identified as subsidiaries.

Haik Watch and Jewelry Co., Canada’s Canadian First Dynasty Mines Ltd, GPM Gold, a subsidiary of Russia’s GeoProMining Ltd, Global Gold Armenian Ltd of the United States, Geologix Group, Rodino Haskovo JIC, Centro Ceibal, Deccan Gold Mines Ltd.  The heads of Indian Sterlite Gold Ltd and Cosmote Romanian Mobile Telecommunications SA repeatedly crossed the state border of Azerbaijan illegally from the Republic of Armenia in 1999-2017, to  Khankendi, Shusha, Lachin, Kalbajar districts and other settlements in accordance with the laws of the Armenian. The facts have been established that the companies  have caused a great deal of damage of nature of  Karabakh and have illegal income through their activities, including the establishment of illegal enterprises for exploitation and the exploitation of natural resources and minerals.

Traditional International Humanitarian Law, in particular the Hague Rules IV of 1907 and the IV Geneva Convention of 1949 which is declares the occupying state’s obligation to protect the natural resource in the occupied territories .

The Geneva Convention on the Occupied Territories, where has lost its legitimate administration and whose legal status is still unknown, prohibits companies from mining in areas that have been occupied for a long time and whose actual status is still unclear. The occupying state has no legal authority to exploit any natural resource or property in the occupied territories for the benefit of its economy.

In addition, under the EITI strategy, companies must enter into an agreement with a state-governed legal entity in the extraction of natural resources in the area.

On the other hand, after 2-nd Karabakh War between Azerbaijan and Armenian military forces, the Veynalli field in the Zangilan region was completely liberated from the occupiers, and mining operations in the Zod (Kalbajar) field by Armenians were suspended. At present, the Zod field is planned to be exploited by Azerbaijan.

According to the renewed Production Sharing Agreement between the Ministry of Economy  of Azerbaijan and Anglo Asian Mining PLC on September 28, 2021, two contract areas – Vejnali and Gizilbulag – were developed and the Soyudlu contract area was canceled. Activities under the Production Sharing Agreement for each of these areas will be starting after the Government of Azerbaijan notifies the Company that all military operations have been suspended and access to the area is safe while the   right to develop and operate for a period of 15 years with the extension of two five-year periods.

 According to the decree of the President  of Azerbaijan dated on May 29, 2021, the study, research, exploration, development and  an agreement was signed between Turkish companies and the Ministry of Economy of Azerbaijan  on the commissioning of a 30-year contract for operational purposes, and the legal basis for the start of mining in three important ore deposits in the Karabakkh region of Azerbaijan .

However, the fact that the terms of these agreements are not open to the public is of particular public concern.

Taking into account all the above, the EITI Coalition:

  1. Drawing attention to the fact that Armenia’s years-long plunder of Azerbaijan’s natural resources, ignoring all the above-mentioned norms of international law, should result in international responsibility, to take appropriate international legal measures against the occupier Armenia and the companies that have illegally operated there and are still operating there, taking control of the legal aspects of the issue;
  2. As a result of the Armenian occupation, Azerbaijan’s natural resources such as gold, silver, copper, molybdenum, etc. to take legal measures to compensate the Armenian state for the material and moral damage caused to the people and nature of Azerbaijan and the nature of Karabakkh as a result of the illegal exploitation of natural resources;
  3. The Government of Azerbaijan should to ensure the disclosure and public access to contracts for the exploitation of natural resources in the liberated territories, to inform the public about the terms of the contracts, as well as to facilitate the activities of NGOs to monitor the implementation of these agreements;
  4. The Company of Eti Bakır A.Ş. and Artvin Maden A.Ş as the Turkish companies that has signed a new contract with mining companies in the liberated territories, also the Anglo Asian Mining company which is operating in Azerbaijan for a long time should work within the framework of international transparency standards, to protect the environment, and to work with civil society to ensure transparency and accountability in the sector.

Coalition of NGOs for Increasing Transparency in the Extractive Industries

January 15, 2022

References:

http://www.globalgoldcorp.com/docs/20110601_ArmeniaMiningJournal.pdf

http://www.globalgoldcorp.com/docs/20171000-GGC-Corporate-Presentation.pdf

https://www.azernews.az/features_and_opinions/175150.html

http://www.nkrusa.org/business_economy/major_investments.shtml

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