By Atom MarkarianThe government announced on Thursday the sale of Armenia’s largest metallurgical complex to several private investors, including a large German company, for just $40 million.
A government statement said Germany’s Chronimet will take over 60 percent of shares of the Zangezur Copper and Molybdenum Combine which was put up for privatization last March. Fifteen percent of its stock will go to a Yerevan-based metallurgical company, while two other obscure firms, called Armenian Molybdenum Production and Zangezur Mining, will each get 12.5 percent. It is not clear who owns them.
The Zangezur plant and adjacent mines, one of Armenia’s few remaining state-run industries, are located near the town of Kajaran in the southeastern Syunik region. The mountainous area has the country’s largest deposits of copper and molybdenum ores. Thousands of people work there.
News of the plant’s upcoming privatization was first announced by Trade and Economic Development Minister Karen Chshmaritian in August. He said at the time that it will likely be bought by Chronimet and the U.S. firm Comsup Commodities on a “fifty-fifty percent basis.” He said each of them will have to invest $150 million in the Soviet-era facility.
There was no word on investment commitments in a statement issued by ministers after their weekly meeting. Nor is it clear why Comsup’s involvement in the deal fell through.
Details of the sell-off were reportedly finalized during President Robert Kocharian’s recent visit to Germany. 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.
The Zangezur complex will be privatized despite being very profitable by Armenian standards. Its annual earnings have totaled at least $10 million in recent years in sharp contrast with other big state-run companies mired in debt.
In a highly controversial decision earlier this year, the government diverted all of the mining giant’s 2004 profits to an obscure private charity which is reportedly run by several top army generals. The government has still not explained motives for the move.