Pashinyan provides comments on Teghut copper deposit and Alaverdi smelter

ARKA, Armenia
Feb 13 2019

YEREVAN, February 13. /ARKA/. Armenian Prime Minister Nikol Pashinyan made explanatory  comments today in response to a question from an MP Armen Yeghiazaryan from the Bright Armenia party regarding the future of the Teghut copper deposit in the northern Armenia and the Alaverdi copper smelter.

According to reports from Alaverdi, the workers of the smelter blocked the railway running to Georgia saying that after the closure of the smelter many  of them lost their jobs and are forced to leave the country in search of employment.

In his comments Pashinyan recalled that VTB Bank had provided a loan of $380 million to Vallex group of companies to develop the deposit.

"In all likelihood, there was political interference to make  the bank provide the loan,  but when time came for its repayment, the company appeared to be unable to do so, being as a matter of fact at the stage of bankruptcy due to solvency problems," said Pashinyan.

He said  after coming to power his government tried to resolve the issue and began negotiations, which resulted in an agreement between VTB Bank and Vallex group of companies, despite the existence of problems with a very complex system of collateral and obligations.

"In fact, last year we reached an agreement that VTB would  become the owner of Teghut deposit and attract a well-known company to operate the deposit and the copper smelter in Alaverdi," said Pashinyan.

Pashinyan said at the initial stage of the process, a strange situation arose, when a company sued Vallex Group for a $4,000 debt  demanding that its property, estimated to cost several hundred million of US dollars, be arrested  as security for payment. 

“Because of this, the previous agreements collapsed, and now the negotiations have returned to zero. We are again negotiating with VTB Bank, because the operator has refused to work in this situation,” said the prime minister.

He noted that the authorities would not put pressure the court  to “remove the debt demand,” since their policy is not to interfere in the judicial processes.

“Negotiations with companies are now entering a new stage. We must assist in resolving the issue as quickly as possible,” Pashinyan said.

In 2018 February Vallex group of companies announced plans to lay off more than one thousand workers. According to a statement provided to the media, the Liechtenstein-registered company’s decision was prompted by the need for further research in order to significantly increase the output. To implement the research, the company was to invite both local and international organizations. Vallex said  it would  refrain from operating the mine until it received grounded proposals from experts.

The company says   it has invested more than $700 million in Armenia and Artsakh (Nagorno-Karabakh) over the past 20 years, including $400 million in the Teghut deposit.

According to estimates made back in Soviet times, the deposit’s potential is 450 million tons of ore, of which the company confirmed only a fifth so far. At the moment, the capacity of the enterprise allows processing up to 50,000 tons of copper concentrate per year and producing 13,000 tons of blister copper.

The Vallex group of companies includes Base Metals operating in Artsakh,  the Armenian Copper Program operating the copper smelter in Armenia’s Alaverdi, the Institute of Mining Metallurgy and Vallex IT LLC, engaged in information technology.  –0–