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Who owns Armenia’s mines?

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Mining is one of the most important sectors of the Armenian economy. Because of the Extractive Industries Transparency Initiative, the country now has to undertake a series of reforms for transparency and accountability.

Armenia is rich in a number of metal ores: iron, copper, molybdenum, lead, zinc, gold, silver, aluminium, and rare metals which naturally occur in the aforementioned ores. Copper and molybdenum are the most significant for the country. The largest mine in Armenia, the Kajaran copper and molybdenum mine, claims reserves of 2.24 billion tonnes of ore — 6 percent of global molybdenum reserves. Kajaran also accounts for 60% of mining turnover in the country. Given its confirmed reserves and the current rate of mining (18 million tonnes per year), the mine could be operational for another 100–120 years.

According to data from the Ministry of Energy Infrastructure and Natural Resources, there are 670 solid mineral mines, 30 out of which are metal mines. On 1 January of 2017, there were 431 mining companies licensed in the country, 28 of which are for metals. Copper, gold, and molybdenum have the largest share of Armenian metal exports. Eighteen of the 28 licensed mines contain polymetals and gold, 9 contain copper and molybdenum, and 1 contains iron.

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The mining sector employs around 10,000 people. The nominal monthly salary in the industry is $710, which is double the national average salary (the salary is high because of the high value of the product, the profitability of the sector, and work-related life and health hazards).

According to official data, in 2015 16.4% of the entire industrial output of the country was in mining ($456 million); the following year, the number was 16.7% ($494 million). Mining accounted for 4.4% of GDP in 2015; in 2016, this number fell to 2.6%. However, the share of the industry in exports remains over 50%, with copper alone taking up 23–26% of all exports.

As a result, mining and associated industries are an important source of government revenue; companies operating in the sector are large taxpayers. In 2016, 11 of the 1,200 largest tax-paying companies were related to mining, and the taxes paid by these companies (including customs, duties as well as other dues to the state budget) totalled around $80.8 million.

Lack of transparency

Despite the sector’s economic importance, transparency of information regarding the owners of the mines is problematic, as the names of companies’ shareholders are not publicly available. The companies’ official websites also do not contain any ownership details. There is hope, however, that membership in the Extractive Industries Transparency Initiative could bring greater transparency.

The second largest copper mine after Kajaran is the Teghut mine in northern Armenia’s Lori Province, which belongs to the Vallex Group. The mine became operational in late 2014. According to the company’s website, the mine contains 454 million tonnes of ore with concentrations of 0.36% of copper and 0.02% molybdenum. The processing plant is expected to have a capacity of 7 million tonnes per year.

Gold mining is primarily from the Sotk mine (Gegharkunik). Gold is also a major product of Dundee Precious Metals’ Shahumyan mine. Lydian International’s Amulsar mine also contains gold ores which are low in concentration but vast in volume. The latter obtained its license in 2012, and construction is planned to be completed by the spring of 2018. The first gold bar is expected to be molded in March 2018.

According to Lydian International’s website, the mine contains reserves (meaning concentrations of at least 0.2 grammes per tonne) of 67 million tonnes. The actual average concentration of metals in the ore in this mine is, however 0.79 grammes per tonne for gold and 3.68 grammes per tonne for silver. They say they intend to operate the mine for 10 years, producing 5,700 kilogrammes of gold per year. Yearly revenue, calculated from current market prices, will average around $200 million per year.

Source: balcanicaucaso

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