Armenia’s mining and metallurgical companies, the largest export-oriented sector of the national economy, appear to have ended 2009 with significant production gains resulting from a rally in global prices of copper and other base metals.
Official statistics show their combined production of non-ferrous metals and metal ore concentrates growing by roughly 14 percent to 152.8 billion drams ($424 million) in the first eleven months of the year.
The figure was equivalent to just over a quarter of overall industrial output which shrunk by 10 percent in January-November 2009. The Armenian economy as a whole contracted by 16 percent year on year during that period.
The collapse of international commodity prices in the second half of 2008 was one of the reasons why Armenia was hit particularly hard by the global economic crisis. It not only slashed the country’s modest export revenues but also forced local mining factories to lay off or send on indefinite leave hundreds and possibly thousands of workers in the beginning of 2009. Some of those enterprises halted their operations altogether.
In a bid to shore up the struggling sector, the Armenian government allocated in June $44 million in emergency loans to the Zangezur Copper and Molybdenum Combine, the country’s largest industrial enterprise, and another, smaller company. That and, more importantly, rallying metal prices enabled the sector to start recovering from the crisis.
Data released by the National Statistical Service (NSS) show that the growing value of copper, Armenia’s main mining item, in world markets was the key factor behind the recovery. The copper price more than doubled in 2009 and reached a 16-month high of around $7,500 per metric ton this week. It rose by more than 36 percent in the last three months alone and may well get closer to the pre-crisis peak level of about $9,000 per ton in the months ahead.
The NSS at the same time reported decreases in the production of other non-ferrous metals extracted in Armenia, notably molybdenum and zinc. Their international prices have been bouncing back far more slowly.
The sector was also greatly helped by a near doubling of output at the Yerevan-based plant Armenal, which is owned by the Russian aluminum group Rusal. Armenal’s main product is aluminum foil.
The production gains have yet to reflect positively on Armenia’s net exports which tumbled by as much as 37.4 percent to $624 million in January-November 2009. Ore concentrates and metals accounted for just over half of that, solidifying their status as the country’s largest export item. Still, export revenue from them fell by 34 percent in absolute terms, according to the NSS.