Europe’s current economic woes are unlikely to lead to a sharp drop in international prices of base metals and thus hit Armenia’s most important source of export revenue, Economy Minister Tigran Davtian insisted on Tuesday.
Official statistics show that copper, molybdenum and other non-ferrous metals and ore concentrates accounted for 58 percent of Armenian exports and rose by 23 percent in absolute terms in January-November 2011.
The local mining industry has greatly benefited from a strong rally in metal prices in the international markets that followed the 2008-2009 global recession. Analysts warn that the continuing sovereign debt crisis in Europe could send these and other commodity prices tumbling again. Moody’s Investors Service, a risk assessment agency, cited this possibility when it lowered its outlook for the Armenian economy in November.
Davtian sounded more optimistic in that regard. “At the moment those prices are such that they ensure profitability,” he said. “In terms of copper prices, there are no big concerns. Only the price of molybdenum has reduced profit margins [of mining companies] a little. It’s minimal now.”
“But as things stand now, I think that those sectors will remain profitable in the near future and in the course of this year,” Davtian told a news conference.
Armenia’s two largest metallurgical enterprises, which employ thousands of people, plan to expand their operations by developing new ore deposits. Those plans are fiercely opposed by the country’s leading environment protection groups that have long accused the mining industry of polluting air, water and lands.
Davtian also announced that Prime Minister Tigran Sarkisian will set up and chair soon a Supreme Industrial Council that will be tasked with helping to implement the Armenian government’s new export promotion strategy approved in December. He said most members of the body will be private sector executives and representatives of business associations.
The government document drawn up by Davtian’s ministry calls for roughly doubling Armenian exports to $3.5 billion by 2015 and raising their volume to at least $5 billion by 2020. Officials say the emphasis will be put on manufacturing sectors other than mining and metallurgy.
Davtian was reluctant to go into details on Tuesday. “We should produce what suits our economy and its size,” he said. “Our problem is that our size sometimes is not big enough to meet demand. So we need to find small niches in the global economy. We’re not going to manufacture Boeings.”