YEREVAN (RFE/RL)–The Armenian government approved on Friday $44 million in fresh loans to three mining companies that have been struggling as a result of the global economic downturn.
The decision was made at a special government meeting held in Kapan, the capital of the southeastern Syunik region. The mountainous area bordering Iran is home to most of Armenia’s mining metallurgical enterprises. The three recipients of the government loans, repayable in four to five years, are also based there.
Prime Minister Tigran Sargsyan was reported to say that the financial assistance was made possible by a $500 million Russian credit obtained by Armenia recently and will significantly improve the economic situation in Syunik. “The loans will allow these enterprises to operate at top gear and overcome temporary difficulties generated by the global financial-economic crisis,” Sargsyan told ministers, according to his press office.
In a statement, the office said one of the loans worth $14 million will go to a copper and molybdenum plant in Agarak, a small town on the Armenian-Iranian border. Many of its 1,500 or so employees have been laid off or sent on indefinite leave this year following a sharp drop in international prices of non-ferrous metals. The statement said the Russian-owned company will use the money to upgrade its obsolete equipment and lower production costs.
The two other, more obscure firms, Zangezur Mining and Armenia Molybdenum Production, will get $15 million each. They both hold 12.5 percent stakes in the Zangezur Copper-Molybdenum Combine (ZCMC), the country’s largest metallurgical enterprise based in Kajaran, about 40 kilometers north of Agarak. The rest of the ZCMC stock is controlled by the German metals group Cronimet.
The government’s press office could not clarify whether Zangezur Mining and Armenia Molybdenum Production plant will use the government loans for supporting the mining giant or other purposes. Neither company is known to control other industrial facilities.
ZCMC could not be reached for comment. A company executive told RFE/RL that only the ZCMC chief executive, Maxim Hakobian, is in a position to make such clarifications.
Zangezur Mining is reportedly owned by Hakobian. Opposition politicians and media have for years claimed that former President Robert Kocharian also holds a major stake in ZCMC. But they have not backed up those claims with any documentary evidence.
The government already disbursed a $10 million loan to ZCMC last February to help it cope with the global recession. The company claimed to have repaid the debt two months later. Unlike other mining enterprises, ZCMC has not resorted to job and production cuts so far. Hakobian said in February that the company plans to boost output and expand its 3,000-strong workforce in the near future.
Non-ferrous metals have become Armenia’s number one export item in recent years on the back of their soaring prices in world markets. The collapse of global demand for them is the main reason why Armenian exports tumbled by 52 percent in the first five months of this year.
In a related development, the government on Friday set aside $250 million of the Russian loan for a special “stabilization fund” that will provide lending to other sectors of the Armenian economy. The government statement said two thirds of the sum is to be channeled into commercial banks and other finance companies.