Armenia Can Have Several More Giants Like ZCMC -

Armenia Can Have Several More Giants Like ZCMC

Armenia Can Have Several More Giants Like ZCMC

On January 10-12, the Future Mineral Forum, initiated by the Government, was convened for the second time in Riyadh, the capital of Saudi Arabia. The mission statement of the forum was "The World's Next Mining Hub: A New Gateway to Lands of Opportunity".

The Forum brought together global mining policy makers, investors and business leaders under one roof. More than 150 investors, representatives of over a hundred mining corporations and countries arrived in Riyadh.

Although Saudi Arabia is one of the most developed oil producing and exporting countries in the world, the country's government is also taking steps towards the development of the metal mining industry. In the end of the forum, the American Ivanhoe Electric, headed by prominent mining magnate Robert Friedland, established a 50/50 joint venture with Ma'aden, a Saudi Arabian mining company. Under the agreement reached, Ma'aden will make available an area of about 48,500 square kilometers (1.6 times larger than the territory of Armenia) in Saudi Arabia to Ivanhoe Electric for exploration under a special permit.

The new global demand for mining caused by the increasing role of renewable energy, along with geopolitical developments, opens up new opportunities in the sector, which everyone, even the most developed countries, strive to take advantage of. Saudi Arabia is just one of the many examples that, through such events, appears before the world as a country with an open and transparent investment environment in the metal mining sector.

Until 2018, for 10 years we have been presenting the Amulsar Project at the PDAC, the largest annual convention of mining industry in Toronto. It was also a good opportunity, in conjunction with Amulsar, to increase the awareness of Armenia on the foreign market and present the country’s investment opportunities. PDAC is the largest platform in the mining sector that brings together more than 20,000 industry representatives from different countries and companies every year. Even today, during the convention, you can see the booths of Finland, Norway, Sweden, and many such developed countries that at the government level represent the investment strengths of their country in the metal mining industry and attract investors.

The subsoil of Armenia is rich in natural resources with a huge potential, even in terms of oil and gas, which is has not been fully explored yet. Therefore, this sector can be of interest to foreign investors. Through such platforms, we also could tell about ourselves to the international mining market. However, before appearing at various venues, we have quite a lot of “homework” to do for making the investment environment of Armenia more attractive to investors.

Since independence, there hasn’t been a clear government approach to Armenia’s mining industry, the sector hasn’t had any strategy. The steps taken last year towards the mining sector strategy development are welcomed, but it has not yet been approved. Therefore, as a first step, it is important to approve the strategy with its guiding policy and action plan without delay. Ensuring the challenges and barriers in this sector to be identified in full, finding solutions thereto and developing of the sector are hardly possible without having an appropriate strategy in place. For any state, it is a big challenge to accomplish this entire process, after overcoming which tangible results can be achieved.

Sweden has followed this path, which in 2015 published the updated mining strategy aimed at ensuring the sustainable use of the country’s mineral resources and strengthening its position as the EU’s leading mining country.

We have too much to do in Armenia. As part of the strategy, it is critical to establish a stable legal framework, taking into account the peculiarities of the mining industry and its financing, and in the long term, to lay down equal rules of the “game” that will not undergo frequent changes at least in the next 20 years.

The same is for the tax policy. Tax overloading of mining companies is unacceptable. While in the short term, it tackles certain financial issues, but in the long term, the existing problems remain unsolved, and the sector is deprived of the opportunity for qualitative development.

For example, the tax overload prevents mining companies from directing the additional profits generated due to the increase in the international prices for metals to ease their financial burden and/or upgrade the technological and environmental capabilities of their projects. We should also bear in mind that the mining sector is not free from rapidly developing technology innovations. For example, today leading companies have started using special drones during geological exploration.

Non-operating mines, such as, for example, Teghut, Amulsar and other projects with operation permits need special attention. Today we cannot afford such a luxury and not use the capacity of these mines. The government should take steps to urgently address the existing problems and work with companies to restart these projects.

These are the minimum steps that can create a stable, predictable and favorable business environment for foreign investors. After the above is ensured, it is important to carry out proper awareness activities in the international market, work with investors already operating in Armenia, because they are also indirectly the investment “ambassadors” of our country in the foreign market.

I am sure the mining sector of Armenia has a significant development potential, and if we follow this path, there would be all possibilities to have several more giants like the Zangezur Copper-Molybdenum Combine.

Hayk Aloyan is the managing director of Lydian Armenia.

These views are his own.


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