YEREVAN (RFE/RL)–Armenia’s second largest mining company said on Friday that it is reconsidering plans to shut down a copper smelter employing hundreds of people following the recent devaluation of the national currency, the dram.
The Lichtenstein-registered Armenian Copper Program (ACP) already closed its copper and molybdenum mine and ore-enrichment plant near the northern town of Alaverdi last November, citing the impact of the global economic crisis. At least 400 local residents were laid off as a result.
ACP announced late last year that it will also halt operations at the old smelter in Alaverdi because of the global downturn and a major increase in the price of natural gas effective from April 1. The company also cited its failure to meet government deman’s to considerably reduce the Soviet-built facility’s poisonous gas emissions by 2009.
According to its executive director, Gagik Arzumanian, ACP has calculated that the nearly 20 percent depreciation of the dram enables it to keep the smelter operational and save its 600 or so jobs. “It is possible to continue the smelter’s operations after April 1 if we manage to ensure sufficient supplies of raw materials and if we smoothly get value-added tax refunds from the state,” he told RFE/RL.
Arzumanian made clear at the same time that ACP will not be able to cut its hazardous emissions by modernizing or replacing the Alaverdi factory’s obsolete equipment, something which has long been demanded by Armenian environment protection groups. The latter have also been fiercely opposed to ACP plans to develop a massive copper and molybdenum field north of Alaverdi and destroy 357 hectares of rich forest in the process. The Armenian government gave its go-ahead to the controversial project in late 2007.
The Teghut forest close to the Georgian border is estimated to contain 1.6 million tons of copper and about 100,000 tons of molybdenum. ACP intends to turn it into a huge mine and needs to invest $260 million for that purpose. It has been trying to obtain a corresponding loan from the Russian bank VTB. The global economic slump appears to have delayed the release of the loan.
“There are now assurances by the bank that funding will be made available within a month,” said Arzumanian. ACP expects to launch large-scale open-pit operations at Teghut in 2011, he added.
ACP is not the only Armenian mining enterprise to have suffered serious losses as a result of recent months’ dramatic decline in international prices for non-ferrous metals. Two such factories located in the southeastern Syunik region suspended their operations last fall, leaving at least 1,000 people jobless.
Still, the Zangezur Copper-Molybdenum Plant, the largest in the country, has not resorted to mass layoffs of workers so far. The company, mostly owned by the German metals group Cronimet, received a $10 million loan from the Armenian government last month. The loan is due to be used for modernizing Zangezur’s facilities and boosting its output in the coming years.