“The mining business is the most profitable one in the economy now. The old demands in mining use have been replaced with new approaches. It was established that the mines belong to the state,” said RA environmental protection minister Vardan Ayvazyan at the beginning of our conversation.
– In the United States, mines not only belong to the state, but they are explored by the state too. Has Armenia adopted the experience of Chile?
– I wouldn’t say that it is the experience of Chile, but in many countries such as Australia, Canada, Kazakhstan, China, India, Finland, Russia, and many other countries, the approach is the same as in Armenia.
– Can the reserves of those countries be compared with Armenia’s reserves?
– It doesn’t matter how much reserve you have. The most important thing is the mining policy and approach you have. Armenia has adopted the ideology, according to which in the first phase of mining exploitation it is conducting a regional geological exploration to give preliminary estimations about where there are certain reserves. In the second phase, we are entitling private investors to conduct geological explorations. The third phase is the exploitation phase. The termination of the geological exploration work deems the existence of reserves, following which the exploitation work may start. We don’t have any problems with rational exploitation yet. During this phase the state shall figure out certain policies, which will provide the necessary economic exploitation, while abiding to environmental protection norms. The main ideology was that the understanding of the mined reserve was replaced with the understanding of extinguished reserve. In 2001, many involved in mining were complaining that when exploiting their mines they were having losses such as losing part of what they had mined during the course of the mining process, etc. Thus, the state established that the losses other than those expected in advance are due to the users, and that they are responsible to the state budget for the capacities of the distinguished reserves. For the purpose of ensuring they don’t have losses the entities shall make investments in their technologies.
– What kinds of responsibilities do the companies which deal in geological exploration have?
– At this moment there are over 110 companies registered for geological exploration. Armenia is rather rich with non-metallic mines; there are over 550 mines of general reserves. The companies that are entitled for geological exploration are responsible to do their work in a due manner pursuant to the time schedule and plan developed by themselves, present reports and pay fees, which are the environmental and concession payments and the land tax.
– You said that over 110 companies are doing geological exploration. Are all of them domestic companies?
– I am not interested much where those companies are from since they don’t have specific factors in their activities. In other words, we don’t think that the investment of foreign companies is sweeter to us than that of the domestic ones. They don’t have specific responsibilities in term of investment either.
– Have there been any cases when a company didn’t find anything when exploring fields and had losses? What is the benefit of those companies in such cases?
– There have been such cases. Last year in 8 mines the expected capacities of reserves weren’t found after exploration. It is their risk. Furthermore, in case of finding reserves, the explorer gets a priority right for exploitation till 2007. The exploitation fee is very low; in case of metallic reserves it sums at 1.5-2% of the market price, and in case of non-metallic reserves the fee is fixed, which does not exceed 3.5-4% of the market price. For instance, this environmental fee for gold is equal to 1.5% of its market price. If the market price for one gram is $20, this environmental fee is 30 cents.
– There are about 10 companies engaged in geological exploration work, which are registered in the names of your family members. “SurArt” LLC is registered in the name of your brother, Suren Ajvazyan. “Nagin” is represented by your wife and son.
– My family members are citizens of Armenia too and they can be engaged in any activities allowed by the law. This is for your information. I have two brothers – Gagik and Bagrat. As you see, the director of the mentioned “SurArt” LLC, Suren Ajvazyan, is not my brother. You can check the other company too, “Nagin” LLC, and you will see that it doesn’t have any relations with my wife and son.
– “Global Gold Mining” geological exploration company has filed a case to international arbitration to argue that its license for Hankavan mine exploration has been terminated illegally. The ministry has given this right to “Interior” LLC.
– “Interior” LLC does not have any mining rights at the moment. It lost that right in April, as it hadn’t done any work in that field. The contentions of “Global Gold” concern the mines of Hankavan and Marjan, alleging that we have treated them unequally. This company has other fields too, but it has no problems in those fields. I don’t want to comment about this, as this case is under arbitration. I can say only one thing about the claiming party: I call on them to publish all the facts and findings after the arbitration; we will do the same too.
– If the arbitration brings up a resolution in favor of “Global Gold”, what will bind Armenia, or, otherwise, what will bind “Global Gold” if it loses the case?
– One of those mines is free now and will be sold by auction. “Global Gold” may take part in the auction if it wants. If they decide that the minister of Environmental Protection has treated them unequally and unfairly and thus has terminated their mining rights, this mine will be given to “Global Gold” without any auction. As for the second mine, which is occupied now, we will have to reimburse losses, but only after the Armenian court’s resolution. But if “Global Gold” loses, it will just apologize – nothing more.
– It is not a secret that mine exploitation work is mostly done in violation of environmental regulations. For factory owners, it is cheaper to pay the environmental sanction fees than buy expensive cleaning filters to reduce pollution.
– In the past the “Gold Factory of Ararat” was permitted to increase the normal content of cyanide by 40 times. Now we have fixed regulations, and if they violate the normal standards, they will be imposed punishments.
– The problem is not the gold of Ararat only, but the same thing is seen also in the copper-molybdenum factories of Kajaran and Alaverdi.
– There are cases when they produce pollution higher than the normal level, in cases of accidents. We have inherited these companies and the state shall give time for these companies to reduce the air pollution they produce, yet the environmental economic sanctions have been significantly increased and thus the air pollution emissions have been reduced. Besides that, they have programs to implement for this purpose during the upcoming five years.
– When is the reprocessing of tailings going to become modern? Experts say tailing dams may bring a catastrophe.
– All tailing dams have the necessary permits and have been ecologically tested. Beside the environmental point, we should also think about whether it is economically effective to use the tailing dams or not. The government initially charges the environmental fees from the extinguished reserves. Environmental fees are charged from the mined field, following which the tailings belong to the exploiters, and it is up to them to decide whether it is effective to use them or not. If an exploiter of a mine thinks it ineffective to reprocess the tailings, the given field will be reclaimed with regard to environmental regulations, and covered with greenery, with plants. This is the same as a non-exploited mine. Fields may become profitable to exploit if the price of the given metal in the field increases in the international market. If the owner fails to process the tailing dams, the government may look for new users for the given fields.
– Doesn’t the allowing of unlimited mining result in ineffective use of the mine’s capacity, due to which a high percentage of the tailings are made up of usable metals?
– If the user mines according to the defined quantity of the mine, it can mine in unlimited quantities. However, if it violates the plan, it will have to pay for the total capacity. This is our main problem and very often we have such conflicts with Ararat Gold Factory. A question arises as to who will exploit the fields that are not rich with reserves. For instance, according to the available information, the total capacity in Kajaran fields is about 4.5-5 billion. The capacity of the field that is under exploitation now was estimated 1.8 billion tons, but now after a reappraisal it has become 2.6 billion tons. It is more by 800 million now. Concerning the reserves of Teghut, they say that there is a large reserve there, but it has only 500 million. Notwithstanding, the reserve capacity in Kajaran fields was increased by 800 million after reappraisal. Doesn’t this difference show that the capacities are rather big? It is also in the interests of users to mine fields that are not very rich, as the price for molybdenum in the international market has significantly increased.