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Armenia's Gold Exports On The Rise But Revenues Drop

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  • Armenia's Gold Exports On The Rise But Revenues Drop

    ARMENIA'S GOLD EXPORTS ON THE RISE BUT REVENUES DROP

    13:15, March 31, 2015

    Seda Hergnyan

    Armenia exported a record 3.6 tons of gold dust in 2014 with a customs
    value of US$ 82 million.

    The exports are in the form of dore (a semi-pure alloy of gold and
    silver usually created at the site of a mine). The Armenian alloy
    contains more than 70% gold. After further refinement, the gold is
    sold on the London stock exchange.

    Figures from Armenia's Customs Service show that gold exports took
    off in 2009 when 1,860 tons were shipped as compared to 252 kilograms
    the year before.

    Copy: | Create infographics

    Armenia's gold is exported to Canada. Only eight kilograms of last
    year's exports went to Switzerland.

    Canada first became interested in Armenia's gold back in 1997 when
    First Dynasty Mines, a Canadian company, purchased shares in the Ararat
    gold processing plant. The plant was transformed into the Ararat Gold
    Recovery Company. Indian billionaire Anil Agarwal bought the company in
    2002. In 2007 it was sold to GeoProMining Gold (GPM Gold), a subsidiary
    of GeoProMining, an international diversified metals resource holding
    company. GPM Gold is one of Armenia's largest investors and taxpayers.

    GPM Gold exports 99% of Armenia's total gold exports. GPM operates the
    Zod (Sotk) mine and the Ararat gold extraction plant. The unprocessed
    ore is transferred from the mine to the plant by rail and Dore bars are
    exported for refining. GPM also operates the Agarak Copper-Molybdenum
    Mine Complex (open pit) in Armenia's southern Syunik Province.

    As of April 2014, GPM Gold has been operating a new Albion processing
    plant at the Ararat facility, which was designed to significantly
    increase the extraction coefficient for sulphide-heavy ores from the
    Zod mine. We will have to wait for the 2014 figures to see if the new
    processing plant has lived up to expectations and increased gold ore
    exports from Armenia.

    Gold is also processed at the Assat Mining Extraction Plant in the
    town of Masis. The quantities are so insignificant as to not impact
    overall exports.

    Armenia imports as well as exports gold

    When gold exports shot up in 2009, imports began to drop. In 2008
    and 2009 Armenia annually extracted 720 and 449 kilograms respectively.

    This amount jumped to 1.95 tons in 2010; 2.7 tons in 2011; 2.9 tons
    in 2012; and 3.5 tons in 2013.

    In 2008, Armenia imported 5,400 tons of gold ore and 1.2 tons in 2009.

    But imports grew to 3.78 tons in 2013. In 2014, Armenia imported
    3.55 tons of gold dust (2.44 tons from Switzerland and 900 kilograms
    from Australia).

    The following comparison is of interest. In 2012 Armenia imported
    1.4 tons and exported 2.3 tons and imported 1.5 tons and exported 2.3
    tons. Thus, in these two years, it exported more than it imported. The
    world price of gold had increased in these two years, which was good
    for Armenia's economy given that gold, in terms of customs value,
    is one of the highest export items as of 2009.

    This picture changed in 2013. That year Armenia imported around one
    ton more than it exported. This tendency remained in 2014.

    World gold prices and the Armenian market

    World gold prices increased from 2002 to 2012. In that ten year period
    the price of one troy ounce (31.1 grams) rose from $300 to $1,750.

    Prices started to drop in 2012. According to stats issued by the
    London Bullion Market Association, the price of one troy ounce was
    $1,201.50 in 2013 and $1,267 in 2014. The Association predicts a
    price of $1,211 for 2015.

    The drop in the price of gold has negatively affected Armenia's
    economy. Revenues derived from Armenian gold exports are dropping
    and so are the taxes paid by mining companies to the state. Taxes
    paid by GPM Gold to Armenia have also dropped.

    In 2013, the company was ranked as the number one taxpayer (7.261
    billion AMD) in Armenia. The next year, it had dropped to 31st place
    (3.897 billion).

    Armenia's Minister of Energy and Natural Resources Yervand Zakharyan
    recently stated that 27 mining permits for ore extraction are
    currently in operation throughout Armenia - eleven for gold and five
    for gold/various metals. The ministry's website says that fourteen
    gold and gold/various metal mines exist in Armenia.

    Estimates place Armenia's gold reserves at 270 tons. Former energy
    minister Armen Movsisyan stated that Armenia's reserves would last
    for 25-30 years.

    Currently, the following mies are in operation - Sotk, Aramanis,
    Toukmanuk, Meghratzor, Sofi Bina, Mardjan, Shahumyan, Terterasar
    and Litchvazk-Tey.

    The fate of the Amulsar gold mine is up in the air. While Lydian
    International has announced that it plans to fully finance the Amusar
    program this year and start construction, environmentalists continue
    to oppose it, arguing that it would be disastrous for the health
    resort of Jermouk and the surrounding environment.

    Of the mines noted above, only Sotk and Amulsar can be considered
    large. Gold reserves at Sotk are estimated at 155 tons and 55 tons at
    Amulsar. The gold reserves at many of the other mines do not exceed
    five tons.

    http://hetq.am/eng/news/59358/armenias-gold-exports-on-the-rise-but-revenues-drop.html

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