ArmInfo. Companies engaged in the development of metal deposits will have to inform the public and government bodies of Armenia about real owners.
Amendments to the law "On state registration of legal entities" and in a package of related laws were approved at a meeting of the parliamentary commission on economic issues. Introducing the draft amendments, Deputy Minister of Energy Infrastructures and Natural Resources of Armenia Vardan Gevorgyan informed that the companies undertake to register owners in the state register. Also, they will have to record all changes in the composition of the owners. The document also presents the procedure for submission of the necessary documents and transactions.
The deputy minister stressed that the package is intended to resolve the issue with the true owners of companies registered in offshore areas, about which the authorities of the country have practically no information. This measure is based on Armenia's international commitments under the Extractive Industries Transparency Initiative (EITI), of which Armenia became a member in 2017 and developed under the initiative of the Road Map for Identifying the Real Owners only 28 companies engaged in the development of metal deposits. As for non-metallic deposits, in the development of which about 400 companies are involved, they are not yet included in this draft amendment.
In turn, Mikael Melkumyan, Deputy President of the National Assembly of Armenia, pointed out a serious problem regarding the mining companies registered in offshore zones. According to him, over the past few years, 50 million tons of ore were exported from Armenia, while in the peak Soviet period this figure did not exceed 8 million tons. The question, according to the deputy, rests on low royalty rates, which in total amount to 16.5%. As a result, depending on price fluctuations on the world market, companies get huge super profits. Mikael Melkumyan reminded again about the construction of a copper smelter by Chinese investors in Armenia. "Unfortunately, this project doesn't come further than conversations, meanwhile, as its construction would solve the issue of royalties and super profits," the MP stressed, noting that the subsoil is state property and should be under its scrutiny. In response, Vardan Gevorgyan informed that a new strategy for the development of the mining industry is currently being developed, in which flexible fiscal mechanisms will be reflected. To note, the state balance of mineral reserves currently accounts for more than 670 solid mineral deposits with proven reserves, including 30 metal. About 400 of these deposits are being developed, including 28 metallic. Among metallic minerals there are 7 copper-molybdenum deposits, 4 copper, 14 gold and gold- polymetallic deposits, 2 iron ore and 1 aluminum ore. Armenia also occupies one of the leading places in the world in terms of the wealth and diversity of reserves of non-metallic ores. According to independent observers, the previous authorities had special agreements with subsoil users, who, using their offshore companies, sold them ore concentrate at a lower price. And those, in turn, resold it at market exchange prices to final consumers. Thus, the republic did not receive almost half of the income from the sale of minerals. This predatory mechanism, as a rule, in international practice is blocked by a high level of royalty, which makes the use of such schemes unprofitable. In Armenia, due to non- gratuitous agreements with the previous authorities, the level of royalties was extremely low, which created a fertile ground for concealing the real incomes of companies and the active use of offshore schemes for this. To recall, immediately after the "velvet revolution" and the change of power in the country, mass actions began in Armenia aimed at hindering the activities of mining companies. RA Prime Minister Nikol Pashinyan touched on this topic. On July 5, during a trip to Syunik region, he stated that if the necessary facts were available, the Armenian government would take a decision on the mining industry. The head of the government stressed that the subsoil of the country was destroyed in Armenia, and the economic growth of the country was tied to world prices for copper. "I think this is a problem, but I don't think that the mining industry should be closed. I gave instructions to conduct research at all polymetallic deposits for compliance with environmental standards. I ask you to give us the opportunity to gather facts on the basis of which it will be possible to make this or that decision. As a PM, I don't have the right to make decisions about the closure of a mine just like that. To make a decision, it's necessary to gather facts that must be indisputable and then decisions will already be made, "Nikol Pashinyan stressed.