Parliament Debates Mining Legislation

One of Armenia's mining sites

YEREVAN (RFE/RL)—The Armenian parliament began debating on Wednesday a government bill aimed at better regulating the mining industry, a key sector of Armenia’s economy suspected of large-scale evasion.

Presenting the draft Mining Code to lawmakers, Energy and Natural Resources Minister Armen Movsisian said it would significantly boost not only the Armenian government’s tax revenues from mining companies but also investments in the sector.

“After the adoption of this code investments in this sector will reach $3-4 billion in the next few years,” claimed Movsisian. He did not elaborate.

Non-ferrous metals such as copper and molybdenum as well as metal ore concentrates are currently Armenia’s largest export item. Their rallying international prices were a major factor behind renewed economic growth registered in the country last year.

The mostly foreign-owned companies dominating the sector employ thousands of people.
Speaking to journalists last year, a senior World Bank official referred to them as a major source of tax evasion.

“The mining sector is rather undertaxed in Armenia,” said Aristomene Varoudakis, the then head of the bank’s Yerevan office. “Taxation regime in the Armenian mining sector is way below the international best standards.”

Varoudakis said at the time that the Armenian government has pledged to remedy the situation with major changes in laws regulating the work of mining companies. Government officials said afterwards that they are discussing with the World Bank the wisdom of adopting a special mining code.

Under the draft code presented by Movsisian, some of the taxes paid by mining firms would be pegged to the floating prices of metals in the international markets. The minister said that alone would translate into more tax revenues.

Artsvik Minasian, a deputy from Armenian Revolutionary Federation, questioned that assertion. He cited another provision that allows investors not to be affected by any legislative changes during the first five years of their operations in Armenia.

“The state would still get no penny from the export of those precious natural resources,” claimed Minasian.

The bill was also criticized by Armenian environment protection groups that have long accused local mining plants of operating in utter disregard of safety norms and environmental standards. Inga Zarafian of the Ecolur non-governmental organization said it only favors the industry.

“Nothing is specified there,” Zarafian told RFE/RL’s Armenian service. “How would the environment be protected? What fines would be paid? Nothing is said about this.”


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