Institute for War and Peace Reporting, UK
July 27, 2006
Armenian Government Takes On Gold Company
An American mining group accuses the Armenian government of trying to
expropriate its assets.
By Susanna Petrosian in Yerevan
Armenia’s environment ministry is trying to revoke the license of an
American gold company in a dispute that puts investors’ rights under
the spotlight.
Connecticut-based Global Gold Corporation, GGC,is contracted along
with the Australian company Iberian Resources to mine gold, silver
and zinc in the Marjan district of southern Armenia until the end of
2007.
Now the ministry is claiming it has lost its right to do so – though
GGC continues its exploratory work, saying it has the law on its
side.
Some say Armenia wants to take back the mine in order to then sell it
off to a Russian group. Russia is by far the biggest investor in
Armenia with investments worth 400 million US dollars.
The government, however, insists GGC has lost its license because it
has failed to meet its obligations.
`The ministry gave the license and it can take it away,’ said Grant
Avetisian, who heads the department for protecting underground
resources at the environment ministry. He declined to say whether the
ministry was planning to go to court to enforce its claim against
GGC.
`GGC carried out only five per cent of the work,’ added environment
minister Vardan Aivazian. `They did not fulfil their duties as
investors. As they cannot work legally, they should go and someone
else should replace them.’
But GGC’s regional director Ashot Boghosian told IWPR that the
company had only just begun work in the mines and there was no legal
basis for stopping them continuing.
Boghosian says that by law his company’s right to do exploratory work
can be suspended only by a court, and that the company must be
informed of the allegations levelled against it 90 days before the
court hearing.
Gagik Adibekian, head of the department that deals with agreements
and contracts at Armenia’s trade ministry, confirmed that a court
order was needed for a company to lose its license.
`We did not receive any warning, and we don’t know what infringement
we have committed,’ said Boghosian.
`If the ministry tries to deprive us of our licenses and to give them
to another organisation, the best definition of this action will be
expropriation,’ said Boghosian. `I don’t think this is the situation,
and I hope that GGC’s investments will not be expropriated, as that
is a serious responsibility.’
Van Krikorian, president and chief adviser to the company, said that
the Armenian government risked counter-measures from the United
States government if it tried to force GGC to shut down its
operations, and that the company might seek international
arbitration. `The decision to strip us of our license is illegal,’ he
told IWPR.
GGC has a number of projects throughout Armenia and says it will
invest almost 10 million dollars in the country by the end of this
year. It says it is spending 1.2 million dollars on its exploratory
work in the Marjan mine, which contains an estimated 17.8 tonnes of
precious metals.
Around 400 people are employed on the project. Ashot Saakian, head of
administration of the nearby village of Arevis, told IWPR that locals
are pinning their hopes on the mining project and on GGC restoring
outdated infrastructure.
The company has won the support of economist and opposition
parliamentary deputy Tatul Manaserian, who said revoking the
company’s license without proper justification could hurt
Armenian-American relations.
`Statements like this made against GGC will make the investment
climate unpredictable in the future, and this lack of clarity is the
most serious threat for business in terms of instability,’ said
Manaserian.
However, the ministry is not backing down. It says not only has GGC
has lost its license, but that it may soon announce the name of the
new company contracted to work in the mines.
A source in government told IWPR on condition of anonymity that a
Russian investor was interested in acquiring the Marjan mine.
Under a `debt-for-assets’ deal, Russian companies now control almost
the entire energy network of Armenia and have expressed an interest
in acquiring the telephone network.
Some experts see this is an economic takeover that undermines
Armenia’s sovereignty, although trade minister Karen Chshmaritian
says there is nothing to be worried about.
`All of these processes, including the energy sector, are under our
full control,’ said the minister.
Critics are not convinced, seeing the travails of GGC as a symptom of
a wider phenomenon.
`Today Armenia’s attitude to investors is defined by its foreign
policy, which is basically focused on Russia,’ said Stepan Grigorian,
head of the Analytical Centre on Globalisation and Regional
Cooperation in Yerevan.
`Russia thinks it is not enough to keep its influence over Armenia
through the military sector alone, and is now using economics as
well.’
Susanna Petrosian is a journalist with the Noyan Tapan news agency in
Yerevan.