Arminfo, Armenia
Oct 13 2018

Alaverdi Copper Plant asks the government for support, otherwise the
operation of the enterprise may be suspended

Yerevan October 12

The workforce of the Alaverdi copper-smelting copper smelter launched
protest actions calling on the country's government to provide an
opportunity for the enterprise to significantly increase sulfur
dioxide emissions. Otherwise, the fines imposed on the company by
environmental supervisory authorities make the operation of the
enterprise unprofitable. The employees of the enterprise on Wednesday
passed a protest rally and even for a short time blocked the
interstate road leading to the Armenian-Georgian border.

In connection with the holidays, ArmInfo correspondent was unable to
contact the management of the Vallex industrial group, which owns the
company, however, according to the information contained in social
networks, it becomes clear that the original ultimatum to the
government is connected with the position of the State Inspectorate
for Environmental Protection, which recently fined the plant 380
million drams ($ 700 thousand) due to a serious violation of
environmental legislation, adopted in 2005. According to independent
observers, the position of the supervisory authority undoubtedly fits
into the fabric of the behavioral line governments aiming to regulate
the behavior of players in the country's mining industry, which, until
the April velvet revolution, tended to regulate some of their
"painful" issues with the state on the basis of informal agreements
that allowed to bypass certain standards in order to increase
production efficiency. Apparently, something similar happened at the
Alaverdi Combine and, according to a new approach, the company fined
the enterprise, gave it a 2-month period to comply with the emission
standard, for which the company simply was not ready.

In an interview with the Public Radio of Armenia, plant manager Lusine
Mezhlumyan recently reported that the practical impossibility of
fulfilling the requirements of environmental inspectorate requirements
brings to the agenda the issue of shutting down the plant, which
employs over 600 people. The problem is complicated by the fact that
the property complex of the enterprise is secured by a loan of $ 500
million, previously received from VTB Bank for the development of a
large Teghut copper- molybdenum deposit, the operation of which was
also stopped due to environmental problems even last year after the
suspension of co-financing by one from overseas lenders. Under these
conditions, servicing a VTB loan becomes extremely unaffordable for an
enterprise and a serious decline in the level of profitability of the
Alaverdi plant, in fact, may lead to its bankruptcy.

Experts with whom ArmInfo correspondent was able to talk, note that
the new government, despite the legitimacy of its position regarding
the inclination of mining enterprises to the need to strictly adhere
to environmental standards, cannot be cut off without thinking about
the undesirable economic, investment and social consequences. Note
that the Alamerda copper smelter was built in the 50s of the last
century. Its modernization under the modern enterprise is extremely
difficult and inefficient. One solution to the problem of processing
copper raw materials inside the country is the construction of a new
plant of average capacity, the interest to which is shown by Chinese
investors. By a decision of Deputy Prime Minister of Armenia Tigran
Avinyan of July 12 of this year, a working group was established to
provide state support to the preparatory work in the framework of the
construction program of the new copper smelting plant by Armenian Kopr
Program CJSC (ACP), also part of the VallexGroup. According to
preliminary estimates, the investment value of the enterprise will be
about $ 80 million. The group included representatives of 4 ministries
- economic development and investments, ecology, finance, as well as
energy infrastructures and natural resources. The work of the
enterprise will allow to get pure copper in Armenia, thanks to which
in the country it will be possible at least partially to restore
various related production. Note that Vallex Group (Vallex Group) was
established in 1998 and unites 20 subsidiary and affiliated companies.
Among them, Teghut CJSC, founded in May 2006, 100% of the shares of
CJSC belong to Teghut Investments Limited of Cyprus, 100% of which
voting shares in turn belong to Armenian Kopr Program CJSC, which is
fully owned by Valery Mejlumyan, and also CJSC "Base Metals",
operating the copper-gold deposit in the village of Drmbon, Martakert
region, NKR, Armenian Copper Program CJSC (ACP), operating the
Alaverdi Copper Smelter.