A Russian commercial bank has gained control over Armenia’s second largest copper and molybdenum mine after its owner's failure to repay hundreds of millions of dollars in outstanding debts.
The VTB bank lent Vallex Group, a private mining company, the bulk of $380 million which the latter claims to have spent on building mining and ore-processing facilities at the Teghut deposit in the northern Lori province. Open-pit mining operations there began in 2014.
Vallex was no longer able to repay the debt after shutting down the mine in January this year. Most of the 1,200 or so people working at Teghut were laid off as a result.
It emerged afterwards that in order to reopen the mine Vallex needs substantial investments to refurbish its tailings dump which poses a threat to the environment.
Visiting Teghut in August, Armenia’s Deputy Prime Minister Tigran Avinian said the Liechtenstein-registered company is now trying to secure a fresh loan from VTB for that purpose. “Either Vallex will again exploit the Teghut mine or a new company will take over,” Avinian told reporters.
The talks between Vallex and VTB appear to have ended in failure. Sahak Karapetian, a senior Vallex executive who managed the Teghut operation until recently, told RFE/RL’s Armenian service (Azatutyun.am) on Monday that the Russian bank has taken over the mine in payment for the debt.
“It can be said that Teghut has ceased to be a part of the Vallex group of companies,” said Karapetian. He indicated that his company will challenge the takeover in court.
Karapetian admitted that Vallex now also risks losing ownership of an aging copper smelter located in the nearby town of Alaverdi. The company used the Alaverdi plant as collateral when it secured the loan from VTB.
Environmentalists opposed the Teghut project from the outset. They argued that it will lead to the destruction of hundreds of hectares of rich forest.
Vallex pledged to plant a new and bigger forest in adjacent areas. It also promised to create many jobs, build new schools and upgrade other infrastructure in local communities.