Armenian government is negotiating to attract a new operator of  Teghut field development project

ArmInfo.The government of Armenia is negotiating on attracting a new operator to the Teghut copper-molybdenum deposit development project. Acting Deputy Prime  Minister Tigran Avinyan said answering the question of the MP  Armenuhi Kyureghyan on November 14 in the National Assembly of the  Republic of Armenia.

According to him, negotiations are underway with one of the Russian  banks related to VTB. The Acting Deputy Prime Minister assured that  there is no decision of the government of the country to close the  Alaverdi Copper Smelter. Negotiations are underway with the owners of  the company and VTB Bank. As Avinyan admitted, sooner or later the  company had to suspend its activities due to environmental risks.   Today, discussions are underway on the construction project in  Alaverdi of a new, larger copper smelter, which will be able to  process over 100 thousand tons of ore per year. Tigran Avinyan also  noted that from next year, the implementation of a program for the  re-cultivation of land near the open fields will begin.

To recall, starting from October 19, 2018, the Alaverdi Copper  Smelter, which produced blister copper using technologies back to the  middle of the last century, suspended its operation. About 650  employees of the company were sent on unpaid leave. The State  Inspectorate for Environmental Protection fined the plant 380 million  drams ($ 700 thousand) due to a serious violation of environmental  legislation, adopted in 2005. In an interview with Public Radio of  Armenia, plant manager Lusine Mejloumian said that the practical  impossibility of fulfilling the requirements prescribed by the  environmental inspectorate brought the issue of shutting down the  plant's work to the agenda.

According to independent observers, the position of the supervisory  authority undoubtedly corresponds to the behavioral line of the new  government, which aims to regulate the behavior of players in the  country's mining industry, who, until the April velvet revolution,  usually regulated some of their "painful" issues with the state on  the basis of informal agreements , allowing to bypass these or other  standards in order to improve production efficiency. Apparently,  something similar happened at the Alaverdi Combine and, according to  a new approach, the supervising authority fined the enterprise, gave  it a 2-month period to comply with the emission standard, for which  the company simply was not ready.

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.

To note, the Alaverdi copper smelter was built in the 1950s of the  last century. Its modernization under the modern enterprise is  extremely difficult and inefficient. One of the solutions 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  Copper 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, finance, as well  as energy infrastructures and natural resources. The work of the  enterprise will make it possible to obtain pure copper in Armenia,  thanks to which it will be possible at least partially to restore  various related production in the country.