Making energy efficiency and responsible mining a reality

Armenia’s energy sector innovates using new technologies, policies
The energy sector in Armenia has made remarkable progress over the last two decades. The industry has transitioned from extreme crises in the early 1990s into demonstrating thought leadership on innovative energy reforms and investment opportunities.

Utilizing vast solar, wind, geothermal and hydro resources through different strategic measures is creating sustainable renewable energy solutions.

“Energy independence is a key to any country’s economic and sustainable growth, and in Armenia, we have all the potential to have that,” said Deputy Prime Minister of Energy Infrastructures and Natural Resources, Hayk Harutyunyan.

Based on the Armenia Development Strategy 2025, the government’s long-term vision is intently focused on maximum usage of domestic renewable energy resources, updating obsolete technologies, diversification of energy supply sources and enhancing energy security to mitigate volatile pricing.

One endemic challenge with this type of shift is rooted in old technologies that decelerate progress. “For example, right now for the heating sector, we do not have any technology which can be universally applied in Armenia to substitute for natural gas in the heating area. We need a technological breakthrough here.

“Thus, alternative energy programs and policies have been implemented to mitigate any deterrence in creating an enticing investment climate. “There are multiple ongoing projects, energy efficiency program for housing renewal, individuals, and businesses -- a lot of targeted programs,” said Harutyunyan.

“Energy efficiency is the central pillar of our energy policy. Energy efficiency is important not only for the energy sector but also for the economy overall and the environment,” explained Mr. Harutyunyan, who has been at the forefront pushing the progressive reform for Armenia. The National Energy Efficiency Action Plan 2010 also came into effect, is updated every three years and has proven to be very positive for accomplishing the task of energy conservation.

“As a result of our activities, three years later we saved 6.6% -- doubling our initial goal.”

They are now in the process of adopting the second three-year plan, which is expected to reach roughly 38% of savings from primary energy consumption. Due to the results, his committed resolve rests in advising on the possibilities these efficiency prospects can bring. “We proved that energy efficiency works. We proved that it can be done on commercial principles, and now banks are encouraged to start lending to public buildings for the energy efficiency projects,” said Harutyunyan.

Recently, the National Assembly passed a bill that abolished taxes for the solar power market. Since then, the use of photovoltaic (PV) panels has grown exponentially, according to the Deputy Minister.

“There is a very progressive reform package in the parliament to promote renewal energy in Armenia that has been introduced.” New streams of financing and awareness campaigns have been implemented to increase public knowledge. “If before people were asking why they should have solar panels, they are now asking why they shouldn’t have solar panels. This is because we created the right environment,” said Harutyunyan. For now, residents can receive a lease from their bank for the equipment. The agreement is structured in a way that only requires payment derived from energy savings after a certain number of years, with no additional costs. “The environment has been set up in a way where basically it’s not logical, not to have solar PV and solar water. We are trying to convey this message every day.”

The long-term idea, he said, is developing larger scale PV projects that will open up the bidding process in Armenia.

Improvements in mining

The mining industry in Armenia keeps a pulse on the economy -- in 2015, copper ore and gold were the country’s No. 1 and No. 3 top exported goods. In 2015, the mineral industry made up 16.7% of total industrial production and grew by huge proportions of 50.4% from the previous year. The mining exports have amounted to $500 million annually.

“Our policy is dedicated to attracting more quality investors to this sector and expose the rich mining potential. They give us good ground for having responsible mining in Armenia,” said Harutyunyan.
“Now we are trying to promote responsible mining in Armenia, and trying to attract investors who are in line with that policy. We are seeking to become a member of EITI,” he continued, “The process of attaining membership is to increase transparency and dialogue between the government, private and civil society.”
Leading by example is Lydian International, an emerging gold developer. Lydian Armenia has 100% ownership of the Amulsar Gold Project, which has become the most prominent gold project in the country.

“Amulsar is the largest success story for the mining industry in Armenia. We had our groundbreaking ceremony earlier this year, and construction will continue for the next one and a half years,” said Hayk Aloyan, Managing Director of Lydian Armenia, who was also a member of the original group that discovered the project. Gold production is set to begin in 2018, expecting to deliver tangible economic gains. Total contribution to GDP is projected to reach $185 million USD, with gold exports on average reaching $286 million, annually.

“Transparency is important, and we are always looking for new opportunities to cooperate with international and local partners. We have great investors, all of whom have made significant investments in Amulsar and the country,” said Aloyan.

“We are committed to being different by bringing new technologies and cooperating with communities in a responsible way. Also, we are working according to international standards -- we want to be an example, and will develop Amulsar in this manner from the start,” he added.

This project is also the first in Armenia to have produced an Environmental and Social Impact Assessment (ESIA) study compliant with IFC and EBRD Performance Standards and Requirements. “We sought broad public consultation during preparation of this document, and it reflects a wide range of commitments Lydian will implement during construction and operation,” said Aloyan.

During the past 11 years, Lydian has spent almost $2.5 million USD for different social projects, dedicated to education, infrastructure, agriculture development, and health development. “Regarding agriculture, we are supporting communities, bringing new experience from our international partners, and also developing greenhouses and teaching them how to do different projects, including food drying, etc., creating small and medium enterprises for the communities,” said Aloyan.

He also emphasized the importance of modernizing the mining practices in Armenia to help draw foreign investment.

“One of the important steps that we have done for foreign investors is opening up the exploration data. With the grant of USAID, the government is committed to digitizing all the exploration data that can be available for the potential investors.”

“It allows any investor to come and put the application in the area where they want to do exploration. Also, the World Bank participated in forming the Armenian mining law, making the law very modern and promising for new investors,” he explained.

Another leader to highlight is Zangezur Copper Molybdenum Combine (ZCMC), a major player in the industry and largest mining entity in Armenia. A key producer of molybdenum and copper, the company origins dating back to the 1950s are at the center of this. Mger Poloskov, General Director of ZCMC, described the history: “Cronimet (parent company of ZCMC) established some partnerships with local entrepreneurs and stepped in on a project of building up a molybdenum concentrate treatment facility here, in Yerevan, which was not the case before. In the Soviet period, all the molybdenum concentrate was delivered out of the country, without creating additional value for the Republic of Armenia.”

The company employs close to 3,500 people a year, with a strong stance on hiring locally and participating long-term. “ZCMC is focused on infrastructure in the region, helping towns and smaller communities. We are working very close with fourteen communities -- we want to ensure that not only state and local government, but for us, as a prominent company in the region, are responsible for ensuring the proper quality of life for the citizens.” He continues.

“Our relation to the neighboring communities is much more important to us, and the focus on what has to be done is not really the same.” Mr. Polosov explains. “It’s a day to day operation, looking at all the necessary things that should be completed such as ensuring that electricity is available, new schools and roads are built, and necessary repairs are made, etc.”

“We are also looking at decreasing our impact on the environment, developing our local staff, which is 99.99% local. Developing the potential of our workforce, especially the young engineers is a priority. We want to involve the local educational capacities, as well as those from abroad, and believe that this is the most important thing we have to do. We have two assets: geology and people, this is what we would like to try to develop,” said Polosov.

Mr. Polosov has a clear message for investors looking at Armenia: “The investment and trade policies are well understandable, reliable, and they are promoting investment.

“Everything is available in Armenia.”

-One World Media