Mineral industry of Armenia

As of 2005, Armenia was a major producer of molybdenum. The Zangezur copper-molybdenum complex possesses large molybdenum reserves that are concentrated in the Kajaran deposit. Besides molybdenum, Armenia has significant deposits of copper and gold; smaller deposits of lead, silver, and zinc; and deposits of industrial minerals, including basalt, diatomite, granite, gypsum, limestone, and perlite.^[1]

In 2005, seventeen mining and metallurgical enterprises were in operation; the largest enterprises mined copper and molybdenum ore or extracted gold from tailings. The country also produced aluminum foil based on raw materials imported from Russia and had a diamond cutting industry using imported raw materials. The country had almost no domestic fuel production and relied for electric power on a nuclear powerplant and hydroelectric plants. It imported fuel for its nuclear powerplant and natural gas from Russia.^[1]

The value of mineral production in 2005 totaled $180 million or about 5% of the gross domestic product (GDP). Mining and nonferrous metallurgy accounted for 55% of the value of industrial production. The mineral sector accounted for 11% of the value of the country’s capital stock.^[1]

Production

In 2005, in the aggregate, the volume of metallic ores mined decreased although nonmetallic ore production increased. The volume of output in both the ferrous and nonferrous metallurgical sectors increased compared with output in 2004. The output volume of individual mineral commodities with respect to output in 2004 varied by commodity.^[1]

Industry structure

The diamond cutting industry appeared to be in flux; it was not possible to verify the continuing existence of a number of diamond cutting enterprises and a few new diamond cutting enterprises apparently were established. Russia’s major aluminum company RUSAL invested more than $100 million in Armenal, which was owned by RUSAL. The Armenal foil plant reopened in December 2005 after being closed for about 1 year for renovation. Plans called for the plant to produce 25,000 metric tons per year (t/yr) of foil. The plant, which would be supplied with raw material from RUSAL, was expected to produce 12% of all foil produced in the CIS by 2007.^[1]

Trade

In terms of value, cut diamond was the country’s leading mineral export followed by copper and ores and slags, of which molybdenum ores and concentrates had the most value. The country reported significant exports of iron and steel, which were either transshipments or scrap as the county had no domestic steel industry.^[1]

Outlook

Further development of the country’s mineral production sector is projected as additional funds become available for mineral sector development. Mineral production has been increasing (except for in the diamond-cutting industry) and the country is making a particular effort to attract investment in its mining sector. Molybdenum output is expected to increase as a result of a successful privatization program that involved a $200 million investment that has enabled the Zangezur copper-molybdenum complex to begin reequipping its mining and processing operations in 2005. The goal is to increase the ore-processing capacity at the Kadzharan deposit by 50% to between 12.5 and 13 million metric tons per year (Mt/yr) of ore by 2008. The Armenian Copper Program (ACP) is also in the process of having the large Teghout copper-molybdenum deposit reevaluated and, if it proves feasible for development, the deposit will be second only to the Kadzharan deposit in the size of its copper and molybdenum reserves. International companies are investing in developing gold deposits in Armenia, including Ararat Gold Recovery Company (a 100% subsidiary of Sterlite Ltd. of Canada) and United States-based Global Gold Corp. Production of aluminum foil is also expected to increase with the restarting of the Armenal plant.^[1]

In February 2011, a Chinese delegation of the Fortune Oil company said the company plans to invest upwards of $500 million in Armenia's mining industry in two stages.^[2]

Mine ownership

While some mines or their operating licences are directly owned by Armenian ministers of parliament through a series of holding companies, others are sold to foreign entities by the same or other MPs. In 2010, Paramount Gold Mining, owned by RA National Assembly President Hovik Abrahamyan and MP Tigran Arzakantsyan, was awarded a 25-year operating license for the southern portion of the Meghradzor gold mine in the Kotayk Province.^[3] According to Hetq, MP Tigran Arzakantsyan, who has not been seen in parliament for quite awhile, is now in Europe seeking out buyers for the mine.^[3] Hovik Abrahamyan was also involved in the sale of the Hankavan gold mine. He also owns an exploratory license for the copper and molybdenum mine in the Vayots Dzor village of Yelpin. The license went to Argamik Ltd., a company registered in the village of Mkhchyan. The company is owned by Argam Abrahamyan, Hovik’s son.^[3]

In January 2011, the Chinese Fortune Oil Company based in Hong Kong purchased 35% of Bounty Resources Armenia, owner and operator of three iron ore mines in Armenia.^[4] Word of the sale spread through the Internet, with the Armenian government providing no details.^[3] According to the website of the London Stock Exchange, the sale amounted to $24 million.^[4] According to Hetq Investigative Journalism, the sale was a private one by Armenian ministers of parliament Vardan Ayvazyan and Tigran Arzakantsyan who through a series of transactions and holding companies have attempted to hide who the real owners of the companies are and to circumvent government scrutiny.^[4]

Environmental impact

According to a study by the Republic of Armenia's RA National Academy of Sciences’ Center for Ecological-Noosphere Studies, mining in Armenia has been disastrous for Armenia in terms of public health and the environment.^[5] Mining operators have failed to neutralize dangerous contaminants which have been absorbed by the ground. The pollutants then pass from the ground to agricultural produce and then to humans. 57% of Yerevan's population may be living in contaminated conditions due to ground pollution. Furthermore, the country’s rural fields are being irrigated with water flowing from contaminated sources due to mining operations. Also, according to the study, all types of farm produce from the towns of Kapan, Kajaran, Alaverdi, and Akhtala (all of which have significant mining operations) are laden with heavy metals, including mercury arsenic and cadmium.^[5]

References

1. ^ ^{a b c d e f g} Richard M. Levine and Glenn J. Wallace. "The Mineral Industries of the Commonwealth of Independent States". 2005 Minerals Yearbook. U.S. Geological Survey (December 2007). This article incorporates text from this U.S. government source, which is in the public domain.
2. ^ "Chinese to Invest $500 Million in Armenia’s Mining Sector". Hetq Online. 2011-02-23. http://hetq.am/en/economy/gov-203/. Retrieved 2011-02-23. 
3. ^ ^{a b c d[dead link]}"Parliament President’s Mining Interests", Hetq Online, February 7, 2011.
4. ^ ^{a b c} "Who’s Minding Armenia’s Natural Resources?", Hetq Online, February 7, 2011.
5. ^ ^{a b} "Academy of Science Experts – Armenia Faces Pollution Crisis", Hetq Online, February 11, 2011.