By Atom Markarian
The government expects to net at least $450 million in cash and investment commitments from the upcoming sale of Armenia’s largest copper and molybdenum mines to a foreign investor, a senior official said on Friday.
Plans for the privatization of the metallurgical complex located in the southeastern town of Kajaran were unveiled by the government on March 11. They were officially presented to over 40 potential buyers at a special conference held in London last week.
According to Industry Minister Karen Chshmaritian, who led a team of Armenian officials at the gathering, the world’s leading molybdenum producers showed interest in one of the country’s few remaining state-run industries. “Armenia is ready to receive bids from companies, hold a tender and select the best one,” he said.
In his words, a prospective buyer will be expected to pay $100 million for the Kajaran plant’s shares and pledge to invest more than $350 million in modernizing its obsolete technological lines.
A similar but much smaller enterprise located about 50 kilometers further to the south, near the Armenian-Iranian border was sold this month to a U.S. firm for only $600,000. The company, Comsap Commodity, pledged in addition to invest $3.5 million this year.
Armenia has one of the biggest deposits of molybdenum ore in the world and is also a major producer of copper. Its mining industry has seen a major decline since the break-up of the Soviet Union and is still struggling to remain afloat despite a production rebound in recent years.
Chshmaritian said Kajaran has to boost its annual ore output at least threefold to 40 million metric tons if it is to stay competitive in the world markets. That requires substantial capital injections which only a big foreign investor can provide, he argued.
Chshmaritian added that the government is ready to begin “exclusive takeover negotiations” with a bidder in exchange for an advance payment of at least $20 million. No tenders will be held if such talks result in an agreement, he said.