Identifier
Created
Classification
Origin
05YEREVAN93
2005-01-20 09:48:00
UNCLASSIFIED
Embassy Yerevan
Cable title:
(IMI) ARMENIA: MINING SECTOR
how-toThis record is a partial extract of the original cable. The full text of the original cable is not available.
UNCLAS SECTION 01 OF 03 YEREVAN 000093
SIPDIS
COMMERCE FOR 3150/PBRADLEY/BSMITH
COMMERCE FOR 4201/ITA/IEP/OEERIS/BISNIS/EHOUSE
EMBASSIES - PLEASE PASS FCS
DEPT FOR EUR/CACEN, EB/CBA
ANKARA ALSO FOR CFC/ SNYDER/BALLINGER
PASS TDA-STEIN, OPIC, EXIM-TUMMINIA/PANARO
E.O. 12958: N/A
TAGS: KTDB BBSR BEXP BTIO AM
SUBJECT: (IMI) ARMENIA: MINING SECTOR
-------
SUMMARY
-------
UNCLAS SECTION 01 OF 03 YEREVAN 000093
SIPDIS
COMMERCE FOR 3150/PBRADLEY/BSMITH
COMMERCE FOR 4201/ITA/IEP/OEERIS/BISNIS/EHOUSE
EMBASSIES - PLEASE PASS FCS
DEPT FOR EUR/CACEN, EB/CBA
ANKARA ALSO FOR CFC/ SNYDER/BALLINGER
PASS TDA-STEIN, OPIC, EXIM-TUMMINIA/PANARO
E.O. 12958: N/A
TAGS: KTDB BBSR BEXP BTIO AM
SUBJECT: (IMI) ARMENIA: MINING SECTOR
--------------
SUMMARY
--------------
1. This cable reviews the current condition of
Armenia's growing mining and minerals sector. It
describes recent sector developments and provides key
contacts. End Summary.
2. Armenia has significant deposits of copper,
molybdenum and gold as well as smaller deposits of
zinc, lead and silver. All of Armenia's known mineral
resources have now been privatized. There are working
enrichment plants and smelters near most mines. Most
mining companies operating in Armenia have investment
commitments to upgrade their facilities and expand
production, which may create export opportunities for
U.S. equipment suppliers. A few firms are looking for
investment partners or debt financing to expand their
existing operations -- see paragraphs 6 and 7.
3. Armenia's largest mining asset, the Kajaran copper-
molybdenum mine in Armenia's southern Syunik region was
privatized in December 2004. A consortium of companies
led by the German Cronimet has taken over the Zangezur
Copper-Molybdenum Plant JSC and expects to produce
18,000 tons of copper and 4,000 tons in molybdenum
concentrates annually. The consortium plans on an
extensive initial investment to upgrade the mine and
plant.
4. The smaller Agarak copper-molybdenum mine is also
located in the Syunik region near the town of Meghri on
the Iran-Armenia border. It has resources of 38.5
million tons of ore grading 0.38 percent copper and
0.025 percent molybdenum. U.S.-based Comsup
Commodities purchased the Agarak Copper-Molybdenum
Plant JSC in 2003. The company plans to invest USD 3.5
million within 2004-2005.
5. The Kapan mine is located near the Syunik region's
capital Kapan. The first plant in this field was Kapan
Ore-Dressing plant, established in 1935. The Swiss
company Deno purchased the Kapan plant in 2002. The
operation has the capacity to produce 3,700 tons of
copper and 6,000 tons of zinc in concentrates per year,
plus gold and silver. Deno is planning to invest up to
USD 10-12 million in the plant.
6. U.S.- and Canadian-owned Metal Prince owns the
mining and exploration rights for three copper mines,
one gold-polymetallic, one zinc polymetallic and one
polymetallic mine located in Armenia's Lori region. In
addition, the company owns an enrichment plant
producing copper concentrate containing 23-26 percent
copper. Metal Prince plans to invest USD 10 million in
developing its Akhtala and Armanis polymetallic mines.
The company has an ongoing project to construct a new
enrichment plant near Armanis mine and increase the
capacity of the existing Akhtala plant. The overall
investment needed for the implementation of the
company's projects is USD 100 million. To complete
these projects, Metal Prince is seeking financing in
the form of debt financing, partnership or a joint
venture.
7. Armenian Copper Program (ACP) owns and operates the
Alaverdi Smelter, which is the largest smelting
facility in the region. ACP's main activity is the
processing of ore and ore concentrate and production of
blister copper for export to European refineries.
Currently ACP has the capacity to produce up to 10,000
metric tons of blister copper from copper concentrate.
The company has contracts with both the Zangezur Copper-
Molybdenum Plant and Metal Prince for the supply of
copper concentrates. The European Bank for
Reconstruction and Development (EBRD) has provided a
credit of USD 4.5 million under the Pre-export
Financing Agreement with ACP. The EBRD has also
provided ACP with technical consultancy on
environmental issues. The revenues of ACP are growing;
the company projects revenues of USD 40 million in
2004.
8. ACP also has an exploration license for two major
mines in Teghut (copper-molybdenum) and Alaverdi
(copper). The company is also involved in the
exploration of Hankadzor (copper),Tandzut (copper-gold-
sulfur) and Margahovit (gold) mines. ACP has
contracted a Canadian company Strathcona Mineral
Services to conduct feasibility studies on the Teghut
mine. The company needs additional investments of
approximately USD 100 million to develop these mines.
ACP seeks foreign investors to join its mining
projects.
9. Armenia's mining sector is regulated by the Mining
Code and the Concession Law of 2003. Both laws clarify
the rights and responsibilities of government entities
and mining and exploration companies. The government
body responsible for the mining sector is the
Department of Mineral Resources under the Ministry of
Nature Protection. It issues licenses as well as
monitors both exploration and production operations.
The Ministry is also responsible for environmental
controls.
10. Due to significant increase of prices for copper
and molybdenum in international markets (a tenfold
increase for copper over the past three years) copper
and molybdenum production in Armenia is growing
rapidly.
--------------
KEY CONTACTS
--------------
Ministry of Nature Protection
3rd Government Building
Republic Square
Yerevan-10
Tel: (374-1) 521-099
Fax: (374-1) 585-469
E-mail: iac@mnpiac.am
Website: www.mnpiac.am
Contact: Mr. Vardan Ayvazyan, Minister
Ministry of Trade and Economic Development
5 Mher Mkrtchyan Street
Yerevan-10
Tel: (374-1) 526-134
E-mail: webmaster@minted.am
Webiste: www.minted.am
Contact: Mr. Arthur Ashugyan, Head
of Mining Industry Department
Armenian Copper Program CJSC
19 Khanjyan Street
Yerevan-10
Tel: (374-1) 526-690
Fax: (374-1) 540-186
E-mail: info@acp.am
Website: www.acp.am
Contact: Mr. Gagik Arzumanyan, Executive Director
Kapan Mining and Processing
Enterprise CJSC
4 Gortsaranayin Street
Kapan 377810
Syunik province
Tel: (374-85) 62-040
Fax: (374-85) 62-040
Contact: Mr. Martik Hakobyan, General Director
Metal Prince
24b Baghramyan Ave.
Yerevan-19
Tel: (374-1) 545-538
Fax: (374-1) 545-539
E-mail: metalking@europe.com
Contact: Mr. Serop Der-Boghossian, President
Zangezur Copper-Molybdenum Plant JSC
18 Lernagortsneri Street
Kajaran
Syunik province
Tel: (374-1) 280-977
Fax: (374-85) 32-846
E-mail: zcmc@arminco.com
Contact: Mr. Maxim Hakobyan, Managing Director
EVANS
SIPDIS
COMMERCE FOR 3150/PBRADLEY/BSMITH
COMMERCE FOR 4201/ITA/IEP/OEERIS/BISNIS/EHOUSE
EMBASSIES - PLEASE PASS FCS
DEPT FOR EUR/CACEN, EB/CBA
ANKARA ALSO FOR CFC/ SNYDER/BALLINGER
PASS TDA-STEIN, OPIC, EXIM-TUMMINIA/PANARO
E.O. 12958: N/A
TAGS: KTDB BBSR BEXP BTIO AM
SUBJECT: (IMI) ARMENIA: MINING SECTOR
--------------
SUMMARY
--------------
1. This cable reviews the current condition of
Armenia's growing mining and minerals sector. It
describes recent sector developments and provides key
contacts. End Summary.
2. Armenia has significant deposits of copper,
molybdenum and gold as well as smaller deposits of
zinc, lead and silver. All of Armenia's known mineral
resources have now been privatized. There are working
enrichment plants and smelters near most mines. Most
mining companies operating in Armenia have investment
commitments to upgrade their facilities and expand
production, which may create export opportunities for
U.S. equipment suppliers. A few firms are looking for
investment partners or debt financing to expand their
existing operations -- see paragraphs 6 and 7.
3. Armenia's largest mining asset, the Kajaran copper-
molybdenum mine in Armenia's southern Syunik region was
privatized in December 2004. A consortium of companies
led by the German Cronimet has taken over the Zangezur
Copper-Molybdenum Plant JSC and expects to produce
18,000 tons of copper and 4,000 tons in molybdenum
concentrates annually. The consortium plans on an
extensive initial investment to upgrade the mine and
plant.
4. The smaller Agarak copper-molybdenum mine is also
located in the Syunik region near the town of Meghri on
the Iran-Armenia border. It has resources of 38.5
million tons of ore grading 0.38 percent copper and
0.025 percent molybdenum. U.S.-based Comsup
Commodities purchased the Agarak Copper-Molybdenum
Plant JSC in 2003. The company plans to invest USD 3.5
million within 2004-2005.
5. The Kapan mine is located near the Syunik region's
capital Kapan. The first plant in this field was Kapan
Ore-Dressing plant, established in 1935. The Swiss
company Deno purchased the Kapan plant in 2002. The
operation has the capacity to produce 3,700 tons of
copper and 6,000 tons of zinc in concentrates per year,
plus gold and silver. Deno is planning to invest up to
USD 10-12 million in the plant.
6. U.S.- and Canadian-owned Metal Prince owns the
mining and exploration rights for three copper mines,
one gold-polymetallic, one zinc polymetallic and one
polymetallic mine located in Armenia's Lori region. In
addition, the company owns an enrichment plant
producing copper concentrate containing 23-26 percent
copper. Metal Prince plans to invest USD 10 million in
developing its Akhtala and Armanis polymetallic mines.
The company has an ongoing project to construct a new
enrichment plant near Armanis mine and increase the
capacity of the existing Akhtala plant. The overall
investment needed for the implementation of the
company's projects is USD 100 million. To complete
these projects, Metal Prince is seeking financing in
the form of debt financing, partnership or a joint
venture.
7. Armenian Copper Program (ACP) owns and operates the
Alaverdi Smelter, which is the largest smelting
facility in the region. ACP's main activity is the
processing of ore and ore concentrate and production of
blister copper for export to European refineries.
Currently ACP has the capacity to produce up to 10,000
metric tons of blister copper from copper concentrate.
The company has contracts with both the Zangezur Copper-
Molybdenum Plant and Metal Prince for the supply of
copper concentrates. The European Bank for
Reconstruction and Development (EBRD) has provided a
credit of USD 4.5 million under the Pre-export
Financing Agreement with ACP. The EBRD has also
provided ACP with technical consultancy on
environmental issues. The revenues of ACP are growing;
the company projects revenues of USD 40 million in
2004.
8. ACP also has an exploration license for two major
mines in Teghut (copper-molybdenum) and Alaverdi
(copper). The company is also involved in the
exploration of Hankadzor (copper),Tandzut (copper-gold-
sulfur) and Margahovit (gold) mines. ACP has
contracted a Canadian company Strathcona Mineral
Services to conduct feasibility studies on the Teghut
mine. The company needs additional investments of
approximately USD 100 million to develop these mines.
ACP seeks foreign investors to join its mining
projects.
9. Armenia's mining sector is regulated by the Mining
Code and the Concession Law of 2003. Both laws clarify
the rights and responsibilities of government entities
and mining and exploration companies. The government
body responsible for the mining sector is the
Department of Mineral Resources under the Ministry of
Nature Protection. It issues licenses as well as
monitors both exploration and production operations.
The Ministry is also responsible for environmental
controls.
10. Due to significant increase of prices for copper
and molybdenum in international markets (a tenfold
increase for copper over the past three years) copper
and molybdenum production in Armenia is growing
rapidly.
--------------
KEY CONTACTS
--------------
Ministry of Nature Protection
3rd Government Building
Republic Square
Yerevan-10
Tel: (374-1) 521-099
Fax: (374-1) 585-469
E-mail: iac@mnpiac.am
Website: www.mnpiac.am
Contact: Mr. Vardan Ayvazyan, Minister
Ministry of Trade and Economic Development
5 Mher Mkrtchyan Street
Yerevan-10
Tel: (374-1) 526-134
E-mail: webmaster@minted.am
Webiste: www.minted.am
Contact: Mr. Arthur Ashugyan, Head
of Mining Industry Department
Armenian Copper Program CJSC
19 Khanjyan Street
Yerevan-10
Tel: (374-1) 526-690
Fax: (374-1) 540-186
E-mail: info@acp.am
Website: www.acp.am
Contact: Mr. Gagik Arzumanyan, Executive Director
Kapan Mining and Processing
Enterprise CJSC
4 Gortsaranayin Street
Kapan 377810
Syunik province
Tel: (374-85) 62-040
Fax: (374-85) 62-040
Contact: Mr. Martik Hakobyan, General Director
Metal Prince
24b Baghramyan Ave.
Yerevan-19
Tel: (374-1) 545-538
Fax: (374-1) 545-539
E-mail: metalking@europe.com
Contact: Mr. Serop Der-Boghossian, President
Zangezur Copper-Molybdenum Plant JSC
18 Lernagortsneri Street
Kajaran
Syunik province
Tel: (374-1) 280-977
Fax: (374-85) 32-846
E-mail: zcmc@arminco.com
Contact: Mr. Maxim Hakobyan, Managing Director
EVANS