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Caucasus Reporting Service
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Armenian Government Takes On Gold Company
An American mining group accuses the Armenian government of trying to
expropriate its assets.
By Susanna Petrosian in Yerevan (CRS No. 350, 27-July-06)
Armenia's environment ministry is trying to revoke the license of an
American gold company in a dispute that puts investors' rights under the
spotlight.
Connecticut-based Global Gold Corporation, GGC,is contracted along with
the Australian company Iberian Resources to mine gold, silver and zinc
in the Marjan district of southern Armenia until the end of 2007.
Now the ministry is claiming it has lost its right to do so ` though GGC
continues its exploratory work, saying it has the law on its side.
Some say Armenia wants to take back the mine in order to then sell it
off to a Russian group. Russia is by far the biggest investor in Armenia
with investments worth 400 million US dollars.
The government, however, insists GGC has lost its license because it has
failed to meet its obligations.
`The ministry gave the license and it can take it away,' said Grant
Avetisian, who heads the department for protecting underground resources
at the environment ministry. He declined to say whether the ministry was
planning to go to court to enforce its claim against GGC.
`GGC carried out only five per cent of the work,' added environment
minister Vardan Aivazian. `They did not fulfil their duties as
investors. As they cannot work legally, they should go and someone else
should replace them.'
But GGC's regional director Ashot Boghosian told IWPR that the company
had only just begun work in the mines and there was no legal basis for
stopping them continuing.
Boghosian says that by law his company's right to do exploratory work
can be suspended only by a court, and that the company must be informed
of the allegations levelled against it 90 days before the court hearing.
Gagik Adibekian, head of the department that deals with agreements and
contracts at Armenia's trade ministry, confirmed that a court order was
needed for a company to lose its license.
`We did not receive any warning, and we don't know what infringement we
have committed,' said Boghosian.
`If the ministry tries to deprive us of our licenses and to give them to
another organisation, the best definition of this action will be
expropriation,' said Boghosian. `I don't think this is the situation,
and I hope that GGC's investments will not be expropriated, as that is a
serious responsibility.'
Van Krikorian, president and chief adviser to the company, told IWPR,
`The decision to strip us of our license is illegal.'
GGC has a number of projects throughout Armenia and says it will invest
almost 10 million dollars in the country by the end of this year. It
says it is spending 1.2 million dollars on its exploratory work in the
Marjan mine, which contains an estimated 17.8 tonnes of precious metals.
Around 400 people are employed on the project. Ashot Saakian, head of
administration of the nearby village of Arevis, told IWPR that locals
are pinning their hopes on the mining project and on GGC restoring
outdated infrastructure.
The company has won the support of economist and opposition
parliamentary deputy Tatul Manaserian, who said revoking the company's
license without proper justification could hurt Armenian-American
relations.
`Statements like this made against GGC will make the investment climate
unpredictable in the future, and this lack of clarity is the most
serious threat for business in terms of instability,' said Manaserian.
However, the ministry is not backing down. It says not only has GGC has
lost its license, but that it may soon announce the name of the new
company contracted to work in the mines.
A source in government told IWPR on condition of anonymity that a
Russian investor was interested in acquiring the Marjan mine.
Under a `debt-for-assets' deal, Russian companies now control almost the
entire energy network of Armenia and have expressed an interest in
acquiring the telephone network.
Some experts see this is an economic takeover that undermines Armenia's
sovereignty, although trade minister Karen Chshmaritian says there is
nothing to be worried about.
`All of these processes, including the energy sector, are under our full
control,' said the minister.
Critics are not convinced, seeing the travails of GGC as a symptom of a
wider phenomenon.
`Today Armenia's attitude to investors is defined by its foreign policy,
which is basically focused on Russia,' said Stepan Grigorian, head of
the Analytical Centre on Globalisation and Regional Cooperation in
Yerevan.
`Russia thinks it is not enough to keep its influence over Armenia
through the military sector alone, and is now using economics as well.'
Susanna Petrosian is a journalist with the Noyan Tapan news agency in
Yerevan.
From: Baghdasarian
Caucasus Reporting Service
Caucasus home
Armenian Government Takes On Gold Company
An American mining group accuses the Armenian government of trying to
expropriate its assets.
By Susanna Petrosian in Yerevan (CRS No. 350, 27-July-06)
Armenia's environment ministry is trying to revoke the license of an
American gold company in a dispute that puts investors' rights under the
spotlight.
Connecticut-based Global Gold Corporation, GGC,is contracted along with
the Australian company Iberian Resources to mine gold, silver and zinc
in the Marjan district of southern Armenia until the end of 2007.
Now the ministry is claiming it has lost its right to do so ` though GGC
continues its exploratory work, saying it has the law on its side.
Some say Armenia wants to take back the mine in order to then sell it
off to a Russian group. Russia is by far the biggest investor in Armenia
with investments worth 400 million US dollars.
The government, however, insists GGC has lost its license because it has
failed to meet its obligations.
`The ministry gave the license and it can take it away,' said Grant
Avetisian, who heads the department for protecting underground resources
at the environment ministry. He declined to say whether the ministry was
planning to go to court to enforce its claim against GGC.
`GGC carried out only five per cent of the work,' added environment
minister Vardan Aivazian. `They did not fulfil their duties as
investors. As they cannot work legally, they should go and someone else
should replace them.'
But GGC's regional director Ashot Boghosian told IWPR that the company
had only just begun work in the mines and there was no legal basis for
stopping them continuing.
Boghosian says that by law his company's right to do exploratory work
can be suspended only by a court, and that the company must be informed
of the allegations levelled against it 90 days before the court hearing.
Gagik Adibekian, head of the department that deals with agreements and
contracts at Armenia's trade ministry, confirmed that a court order was
needed for a company to lose its license.
`We did not receive any warning, and we don't know what infringement we
have committed,' said Boghosian.
`If the ministry tries to deprive us of our licenses and to give them to
another organisation, the best definition of this action will be
expropriation,' said Boghosian. `I don't think this is the situation,
and I hope that GGC's investments will not be expropriated, as that is a
serious responsibility.'
Van Krikorian, president and chief adviser to the company, told IWPR,
`The decision to strip us of our license is illegal.'
GGC has a number of projects throughout Armenia and says it will invest
almost 10 million dollars in the country by the end of this year. It
says it is spending 1.2 million dollars on its exploratory work in the
Marjan mine, which contains an estimated 17.8 tonnes of precious metals.
Around 400 people are employed on the project. Ashot Saakian, head of
administration of the nearby village of Arevis, told IWPR that locals
are pinning their hopes on the mining project and on GGC restoring
outdated infrastructure.
The company has won the support of economist and opposition
parliamentary deputy Tatul Manaserian, who said revoking the company's
license without proper justification could hurt Armenian-American
relations.
`Statements like this made against GGC will make the investment climate
unpredictable in the future, and this lack of clarity is the most
serious threat for business in terms of instability,' said Manaserian.
However, the ministry is not backing down. It says not only has GGC has
lost its license, but that it may soon announce the name of the new
company contracted to work in the mines.
A source in government told IWPR on condition of anonymity that a
Russian investor was interested in acquiring the Marjan mine.
Under a `debt-for-assets' deal, Russian companies now control almost the
entire energy network of Armenia and have expressed an interest in
acquiring the telephone network.
Some experts see this is an economic takeover that undermines Armenia's
sovereignty, although trade minister Karen Chshmaritian says there is
nothing to be worried about.
`All of these processes, including the energy sector, are under our full
control,' said the minister.
Critics are not convinced, seeing the travails of GGC as a symptom of a
wider phenomenon.
`Today Armenia's attitude to investors is defined by its foreign policy,
which is basically focused on Russia,' said Stepan Grigorian, head of
the Analytical Centre on Globalisation and Regional Cooperation in
Yerevan.
`Russia thinks it is not enough to keep its influence over Armenia
through the military sector alone, and is now using economics as well.'
Susanna Petrosian is a journalist with the Noyan Tapan news agency in
Yerevan.
From: Baghdasarian