Vardan Jhanyan: Two or three mining projects equivalent to ZCMC can radically change Armenia`s economic situation 

ArmInfo. Vardan Jhanyan, the President of the Union of Miners and Metallurgists and First Deputy Director General of the Zangezur Copper Molybdenum Combine (ZCMC), is confident that two or three mining projects equivalent in capacity to ZCMC can radically change the economic situation in Armenia.

He stated this to ArmInfo, commenting  at the agency's request on the high performance of the Zangezur Plant, which has topped the list of the country's 1,000 largest  taxpayers for the fourth year in a row.  However, the Zangezur Copper Molybdenum Combine is today far behind other companies in the  industry, which, due to a number of objective geopolitical problems  (such as the Sotk mine), and sometimes for unreasonably subjective  reasons, are not even in the top 20 largest. Among those who are  being "slowed down" and who are not allowed to work yet is the  company "Lydian". Having already invested over 250 million dollars in  the project, they are unable to begin developing the large  gold-bearing Amulsar deposit.  The company is awaiting a decision  from the government, which is inexplicably delaying the process of  issuing guarantees, despite the fact that these guarantees were  supposed to be provided according to the agreement on the transfer of  part of the shares to the government.

ArmInfo asked Vardan Jhanyan to briefly comment on the situation in  the industry focusing on the social, tax, and ultimately economic  importance of the mining industry for Armenia.

- Mr. Jhanyan, today the State Revenue Committee of Armenia has  published a "list of the largest" taxpayers. Once again, ZMMK is  leading the pack. Can you tell me the reason for this success? After  all, just a few years ago, the plant, while still among the largest  taxpayers, was not in first? Some experts believe that it is because  of increased metal prices.

-  ZCMC has been the largest taxpayer for the fourth year in a row.  You are right, before that, the company only  took first place once  in the previous 6 years. Moreover, in recent years, tax payments have  doubled, and sometimes even tripled. Metal prices and regulatory  changes in the tax sphere play a significant role in these  fluctuations. In 2023, the state added tax payments that were later canceled. However, it is important not to underestimate the level of  administration within the company. Various factors can affect tax  deductions both positively and negatively. It is also important to  understand that the mining industry is cyclical. Annual turnover may  depend on the metal content in the ore in a given period,  the  international market situation and other circumstances. Therefore, drawing conclusions about the economic potential of a specific  company or the industry as a whole based on  quarterly or even annual  reports may not be accurate.  

The economic efficiency of any mining  enterprise should be evaluated over the long term, within the  framework of a multi-year cycle. However, we can confidently  acknowledge that ZCMC, under its new management, has emerged as a  leading taxpayer and has consistently maintained this top position. Before this, the company was characterized by, I would say, “tax instability.” Is it merely a coincidence? I think the  professional community can provide an answer to this question.

- So, do you think  the plant has secured its leading position as a  of the state treasury for a long time?

- It is still too early to talk about the future, but I think all the  necessary prerequisites  are in place. As I have mentioned before, in  our area, where  long-term investments and work organization  are  crucial, the results of just a few months, or even a year, may not  fully capture the true dynamics. Comparisons and forecasts should be  based on several years of data. In any case, I have no doubt that  ZCMC will continue to hold significant weight in the economy.

- There is no doubt that the mining industry is the foundation of the  country's economy. It is the primary resource sector, the success of  which is crucial to the long-term economic strategy of the state.  However, why are other enterprises within the industry falling  behind? While there are certainly objective geopolitical reasons,  such as the situation with the Sotk mine being caught in a  geopolitical "trap", does this imply that the mining industry is  undervalued in the country, or that its effectiveness is in question?

- No, I would say differently. This once again shows that, contrary  to the myths that have been spread over the years, the mining  industry in Armenia was limited to 5-6 large enterprises. For  example, the Teghut and Sotk mines have faced various well-known  problems in recent years, and Amulsar has never started operating.  So, this is not an efficiency issue, but rather an indicator that the  mining industry in Armenia is so limited that if one or two companies  in the sector have problems,  then the sector as a whole, and the  economy in particular, remain as if of one major Zangezur plant. Therefore, I will continue to emphasize that two or  three mining projects equivalent to the capacity of ZCMC, have the  potential to radically change the economic situation in the country.  In this regard, I do believe that the prompt initiation of the  Amulsar project is crucial for the country's economy.