By Emil DanielyanA Russian financial and industrial conglomerate could become the new owner of a troubled company developing the bulk of Armenia’s gold reserves, reports from Moscow said on Thursday.
According to the Russian Regnum news agency, the Promyshlennye Investory group has pointedly declined to refute or confirm reports that it is holding negotiations on the possible takeover of the Ararat Gold Recovery Company (AGRC).
AGRC has been widely expected to change hands ever since the Armenian government brought a fraud case against its Indian-owned parent company Vedanta Resources earlier this year. Vedanta was accused of underreporting millions of dollars worth of ore extracted from its Zod and Meghradzor gold mines. The ore is turned into gold at an AGRC smelter in the southern town of Ararat.
Vedanta executives have strongly denied the accusations.
Prosecutors reportedly raided the AGRC offices in January amid media speculation that the authorities have decided force Vedanta to sell its Armenian assets to a Russian investor. The speculation followed President Robert Kocharian’s meeting with his Russian counterpart Vladimir Putin that focused on economic issues. Kocharian described mining as a new promising area of Russian-Armenian economic cooperation.
ARGC’s smelter and mines have since reportedly stood idle, with most of their Indian personnel leaving Armenia with their families. Reports in the Armenian press have also said Vedanta will announce the sale of AGRC to a Georgian subsidiary of Promyshlennye Investory next week.
According to Regnum, a spokesman for Promyshlennye Investory refused to comment on those reports, saying that the Russian group announces its takeovers only after they are agreed on. “If an agreement on the acquisition of AGRC is signed, we will provide relevant information,” Oleg Rumiantsev was quoted as saying.
Another Russian news agency, Interfax, reported last February that AGRC could be purchased by Russia’s leading diamond producer, Alrosa. It cited an unnamed industry source as saying that an Alrosa executive visited Armenia to “examine the state of affairs at AGRC.”
Vedanta has been dogged by controversy ever since its 2002 purchase of AGRC, until then an Armenian-Canadian joint venture. It pledged to breathe a new life into the Armenian gold industry by making large-scale investments and significantly boosting production levels. However, AGRC’s output has since shrunk considerably despite a spike in the international price of gold.
Its Indian executives have blamed the decline on high costs allegedly incurred during ore’s transportation by rail from Zod to Ararat. Two years ago they asked the government in Yerevan for a permission to build a new ore processing plant near Zod. Zod is by far the largest of Armenian gold deposits, containing an estimated 80 metric tons of the precious metal.
The government rejected the $85 million project, strongly opposed by environmentalists, citing the area’s proximity to Armenia’s ecologically vital Lake Sevan. The then Environment Minister Vartan Ayvazian has repeatedly accused the Indians of fraud and mismanagement.
(RFE/RL photo: Zod mines pictured from a helicopter.)