By Atom Markarian
The government clarified on Tuesday terms of the sale of Armenia’s largest metallurgical complex to a German-led consortium of private investors, saying that they will pay $132 million, not $40 million as was initially understood.
The latter figure was mentioned in a government statement last week announcing the country’s biggest privatization deal since 1998. Officials said it only reflected the face value of the Zangezur Copper and Molybdenum Combine’s stock.. The industrial giant, located near the south-eastern town of Kajaran, comprises mines and an ore-enrichment plant.
The clarification was made during the signing of the takeover agreement by Trade and Economic Development Minister Karen Chshmaritian and the chairman of Germany’s Chronimet firm, Guenter Pilarski. Chronimet will directly own 60 percent of the Kajaran complex and control another 15 percent through the Yerevan-based smelter Makur Yerkat where it holds a controlling share.
The two other shareholders, each getting 12.5 percent, are little-known local firms called Armenian Molybdenum Production and Zangezur Mining. It is still not clear who owns them.
Apart from paying the takeover price, the new owners will have to invest $150 million in modernizing the Kajaran within the next four years. The investments are expected to create 1,500 new jobs at the Kajaran plant which currently employs about 3,000 people.
Chshmaritian revealed that Chronimet was chosen from a pool of three foreign bidders, including the U.S. firm Comsup Commodities and Russia’s Soyuz Metal. He said the Germans offered a better deal by pledging to smelt the Kajaran ore within Armenia before selling it abroad.
“Starting from January 1, 2005, Armenia will not be exporting molybdenum ore concentrate anymore. It will be fully processed in Armenia,” Chshmaritian told reporters.
“We will be exporting pure molybdenum to international markets,” Pilarski confirmed. He added that Chronimet plans to double the ore extraction at Kajaran next year.
Chronimet is part of the German ELG Haniel group which specializes in recycling and selling raw materials for the stainless steel industry. The group is present in 15 countries around the world and reported sales exceeding $1.5 billion last year.
(Photolur photo: Chshmaritian, right, and Pilarski sealing the deal.)