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13 July 2023

Mining in the South Caucasus and its Environmental Hazards

Mineral mines are a great potential source of wealth in Armenia, Azerbaijan, and Georgia but also have the potential to do great environmental harm. Three decades after the USSR, how is the industry doing in the South Caucasus?

Mining in the South Caucasus and its Environmental Hazards

Dashkasan field. Image: azergold.az

The mineral wealth of the Caucasus has been known for millennia. Quite apart from the Caspian coast’s oil and gas deposits, which have long given Azerbaijan its nickname ‘Land of Fire,’ the region boasts an astonishing range of metal ore sources. The area was so famed that Jason and the Argonauts headed to Colchis (part of what’s now Georgia) in search of the Golden Fleece— which was possibly a sheepskin that had been used to pan for gold in the rivers: gold flakes would stick to the wool but sand wouldn’t. Archaeologists have found apparent proof of gold sand processing in Western Georgia dating back to the early Bronze Age. Armenia has the richest concentrations of mineral deposits for its size, the most mine sites, and derives a considerable percentage of its export revenues from ore extraction. Close to the Georgian border, the Armenian province of Lori around Alaverdi has long been famed for its copper deposits which attracted Pontic Greek miners (from Anatolia) in the 18th century, later becoming the focus for a border conflict between newly independent Armenia and Georgia in 1918. Armenia’s biggest mining corporation ZCMC (Zangezur Copper and Molybdenum Combine), is one of the world’s top ten producers of molybdenum—an important additive for high-performance steel alloys (as well as being a fertilizer for cauliflower!)

Much of Azerbaijan’s non-oil mineral wealth is in the Lesser Caucasus, with gold at Gadabey and aluminum ore at Dashkasan. Moreover, several mining operations are in areas occupied by Armenia until the Second Karabakh War—notably Zod/Sokt, where the production area straddles the Armenian-Azerbaijani border with predictably problematic results. Georgia has limited mining these days though Chiatura is known for its manganese deposits.

Environmental and Transparency Standards

The USSR left a “harmful legacy of environmental abuses,” which have proved particularly expensive to remedy. Post-Soviet governments had limited resources to fix such legacies or to upgrade polluting, out-dated industrial infrastructure and disposal procedures, such as the containment ponds for ‘tailings’ and contaminated wastewater. A lack of transparency over management structures made locals feel endangered by the lack of oversight that had long been a problem in preventing environmental contamination from mine operators. This has started to change in the last decade or so. 


Back in 2015, the previous Armenian government committed to becoming compliant with the EITI (Extractive Industries Transparency Initiative) to bring the country to international standards in terms of ethics, honesty, open data, and civil society participation. However, according to a World Bank Report, the initial steps lacked substance, and it was really only after the Pashinyan government came to power that important strides were made. Progress has been mixed, but the decision to open up the industry to closer scrutiny has had several interesting effects. In 2018, rigorous inspections were initiated as part of the initiative, and certain mines—notably the new Lichk Copper Mine in the far south—closed rather than submitting to full checks[1]. In February 2018, the operation of a large copper-molybdenum mine near Teghut in Lori Province was temporarily suspended following a leak from its tailings dam into the Shnogh River.