Recently it was reported in the media that the “Vedanta Resources” company was selling Ararat Gold Recovery Company (AGRC). Vedanta Resources is a mining company and operates silver, copper, steel, zinc and other mines in many countries of the world. Ararat Gold Recovery Company became the property of this company last year; before that time it belonged to another foreign company – Sterlit Gold. Certainly, later it turned out that both these companies belonged to the same person, Indian citizen Anil Agarval; the difference is the fact that the first company is registered in the London stock exchange, and the other one in the Toronto stock exchange (Canada). In a word, last year, as a result of the transaction, the balance sheets of one AGRC owner was transferred to the other. To note, in 1998 Sterlit Gold owned only 50% of the AGRC shares with the other part (50%) belonging to the Armenian government. The Company was a joint stock company, where each of the shareholders had $11mln in the charter capital. In 2002 the Armenian government sold its shares in the charter capital to Sterlit Gold for only $3.5mln. Thus, A. Agarval paid just $14.5mln and bought more than 50 tons of gold deposits worth of over $1.7billion. By the way, there have been many publications in the international press reporting that Anil Agarval and his numerous companies in the world are operating their mines with many serious legal and administrative violations; they mine more minerals for cheap prices and sell at the right time. During these several years the ministry of environmental protection conducted several studies of this company and found a number of violations. The court proceedings between the RA ministry of environmental protection ministry and AGRC have not yet concluded, but Vedanta Resources has decided to sell the company and the right for the Sodk mines. We wonder why they want to sell their gold mines, which they have bought very easily and at very cheap prices. We asked this question and a number of other questions to the AGRC General Director, citizen of India B.K. Sharma.
– Mr. Sharma, why does “Vedanta Resources” want to sell AGRC?
– This is the decision of Vedanta Group. The Armenian government does not want AGRC to operate in Armenia, and we are selling it due to their order.
– Why don’t they want this? Aren’t they satisfied with your work or do they want another company to become the owner?
– I can’t say; we were just told during our meetings to sell it.
– Which official of the government told you to sell it?
– The name of that person is not important, but he is from the president’s office.
– Didn’t they say why you should sell it?
– They didn’t say the reasons, but they said that they wanted us to sell it and leave here. Definitely you know that the ministry of environmental protection has been accusing us of hiding gold. They wrote two acts for that purpose, but yesterday the RA Economic court voided those acts. (Yesterday the ministry of environmental protection approved this fact – A.A.). This means that such accusations are baseless. Accordingly, all that we are doing is done according to the law.
– If you are working so honestly, why did you submit to the pressure and decide to sell the company? Why didn’t you try to protect your interests in the Armenian or international courts? Why didn’t you file a court case, like Global Gold did, against the Armenian government and the official you mentioned?
– In the case of Global Gold its licenses were terminated, but in the given case no specific actions have been taken, thus we don’t have any grounds to bring a court case. We are businessmen, and Vedanta has a very good image and huge capital, reaching into the millions. There is no need to operate in such informal conditions, since besides the government and the president’s office all the other governmental entities are creating inadequate conditions as well.
– It is several years that you have had disputes with the government, and last year A. Agarval paid a visit to Armenia and met with the president of Armenia, Robert Kocharyan. Couldn’t they settle those disputes?
– Last year when Agarval came, it was discussed that an investment of $100mln might be made. $35mln has already been invested and numerous facilities have been bought, however, problems started to arise after he left.
– When will the sale process finish? Are there defined buyers? If yes, what companies?
– The transaction is already reaching its conclusion, and we have informed the government that the transaction had almost finished and we were up to the point of executing the sale agreement. The company has announced a competition; many companies have applied from different countries, and the RA ministry of Trade and production made an announcement that the buyer is “Madnueli” company.
– Why are you referring to that notice? Can’t you say who bought AGRC? Besides that, the ministry of trade and production has refuted that they have made such an announcement.
– We will inform about who has bought it very soon.
– It is known that the company has about $10mln of tax obligations and several times more penalties to pay, and for that reason is not attractive in the international market. There is an opinion that not so many companies have been interested in buying AGRC as you say, and also that the rumors and fake publications in the press about its sale have been initiated by the AGRC owners in order to create interest in the company and increase its price in the stock exchange. Besides that, there are rumors that in fact “Madneuli” is just interested in the company and does not intend to buy it yet since you have many pending tax and investment obligations, which the new buyers don’t want to undertake.
– It is the vice versa. Vedanta’s prices in the London stock exchange are increasing; two months ago the price of one share was 12 pounds, and now it is 17 pounds. Vedanta is a very big company and the Ararat Gold plant is a small part of its business, only 0.5%. As for the tax penalty acts, we don’t agree with a number of provisions in them; we have prepared a disagreement act with our advisers, which is now being discussed at the department of taxation claims.
– Do you think these penalties were imposed on the company so that you would sell it?
– It is very possible that the amounts of those sums are not real.
– Where else does Vedanta have plants?
– Nowhere.
– In fact, AGRC was Vedanta’s first business, which was unsuccessful.
– It was Agarval’s initiative; he wanted to make investments here.
– What is the price at which you sold AGRC?
– It is a secret.
P.S. “Arminfo” news agency has informed, basing on their information from Britain, that during this week a contract will be signed between AGRC and the Georgian company Madneuli. Madneuli company is owned by the Russian “Production investors” financial and production group, and its main beneficiary is Russian oligarch Sergey Eneralov. According to Arminfo, the transaction sum is about $80-100 mln.