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Armenian Mining Giant Hit By Tax Hike, Crackdown


Armenia - An ore-processing facility of Zangezur Copper-Molybdenum Combine in Kajaran, February 6, 2016.

Armenian lawmakers approved on Thursday a government proposal to impose a new tax on exports of copper and other metals one day after law-enforcement officers raided the offices of Armenia’s largest mining company partly controlled by an opposition leader.

Prime Minister Nikol Pashinian’s government announced plans to introduce the 15 percent export duty at an emergency meeting held on Monday. It said that international prices of copper and molybdenum, Armenia’s number one export item, have risen significantly over the past year, allowing mining companies to make excessive profits.

Deputy Prime Minister Mher Grigorian objected to the measure during the cabinet meeting, saying that its implementation would be fraught with “risks” to the domestic economy. Pashinian dismissed Grigorian’s concerns.

The outgoing National Assembly promptly adopted relevant government-drafted amendments to an Armenian law on state duties.

Economy Minister Vahan Kerobian said the tax hike is expected to earn the government about 35 billion drams ($70 million) in additional tax revenues in the second half of this year.

Kerobian denied that the main purpose of the measure is to hurt owners and senior executives of the Zangezur Copper-Molybdenum Combine (ZCMC), the country’s largest industrial enterprise based in Kajaran, a town in southeastern Syunik province.

ZCMC’s board of directors comprises Vahe Hakobian, a senior member of the opposition Hayastan bloc led by former President Robert Kocharian. The mayors of Kajaran and several other communities of Syunik are also affiliated with the bloc that finished second in the June 20 parliamentary elections.

During the election campaign Pashinian vowed to crack down on ZCMC’s “corrupt” owners and wage “political vendettas” against local government officials supporting the opposition. He claimed that the mining company banned its employees from attending his campaign rally in Kajaran.

Over the past week, the elected mayors of Kajaran and the towns of Meghri and Agarak and two local government officials from another Syunik community have been arrested on different charges denied by them. Law-enforcement authorities moved on Thursday to arrest two other Syunik mayors affiliated with Hayastan.

Kocharian’s bloc has strongly condemned the arrests, saying that Pashinian’s administration is trying to suppress the country’s leading opposition force. The authorities deny any political motives behind the arrests.

Anna Grigorian, a Syunik-based parliamentarian representing Hayastan, insisted the new mining tax is part of the government crackdown. “During the election campaign they [the authorities] made no secret of their plans to go down this path,” she said.

On Wednesday masked officers of the National Security Service reportedly searched and sealed ZCMC’s administrative offices in Kajaran and detained three company executives. The NSS did not comment on the raid as of Thursday evening.

Earlier this week, ZCMC said that the Armenian customs service is refusing without any explanation to allow more than 70 rail cars laden with its copper and molybdenum ore concentrates to leave the country.

According to the State Revenue Committee, the mining giant employing more than 4,000 people paid 41.7 billion drams ($84 million) in various taxes last year, making it Armenia’s third largest corporate taxpayer.

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