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UPDATE: An update was made on 06․06․2022 in the subheading, “Government as a shareholder: Waiting for the new copper smelter”. The updated section starts with an asterisk (*) and ends with a double asterisk (**).
According to the data of 2021, Zangezur Copper and Molybdenum Combine is the largest taxpayer in Armenia, having paid AMD 48.8 billion in taxes. The filming team of the Fact Investigation Platform visited the city of Kajaran in April of this year, and filmed how blasting works are carried out in the mine adjacent to the city, how the city was covered with a cloud of dust after the blasting works, how the Voghji River, which feeds the city, dries up after water abstraction by the Combine. We also made an exceptional video footage in the territory of the Combine, revealing the poor working conditions in the largest enterprise in Armenia.
Kajaran town is located between the Zangezur Mountains and the Meghri Mountain Range. Kajarants village is located not far from the town, with just a few dozen crooked huts under dilapidated roofs. It is this village that has given its name to the industrial city formed during the Soviet era.
Over the years, the Zangezur Copper and Molybdenum Combine “swallowed” the village. In 1931 Kajarants had 526 residents, while in 2021 the population of the village was 206 people.
Kajarants village
Zangezur Copper and Molybdenum Combine (ZCMC) was commissioned in 1951. It produces copper and molybdenum concentrate. Founded as a state-owned enterprise during the Soviet era, the company was privatized in 2004.
The main facility polluting the air in Kajaran and the surrounding areas is ZCMC. The dust load on the city increases along with the expansion of the Combine’s production capacity.
Before privatization in 2004, ZCMC processed 7.8 million tons of ore per year, while in 2021 the plant’s annual productivity was already 17.6 million tons. And this year it is planned to increase it by another 25% (to 22 million tons).
In response to FIP.am’s inquiry, the Ministry of Environment informed that no dust monitoring is carried out in Kajaran, only sulfur dioxide and nitrogen dioxide are monitored. The Ministry states that the average annual concentrations of sulfur and nitrogen dioxide did not exceed the relevant permissible limit in 2020 and 2021.
The film crew of the Fact Investigation Platform recorded the blasting works in the mine on April 19 of this year. Minutes after the blasting, the city is completely covered with a cloud of dust, as the Combine is located directly within the administrative boundaries of the city. If the wind blows in the opposite direction, the dust is blown towards the village. ZCMC employee Gevorg Manukyan says one can see this picture every day․ Blasting works are conducted in the mine almost every day, and in case of wind and heavy rains, the tailings flow into the city, polluting the Voghji River.
According to the Extractive Industries Transparency Initiative, 4,626 citizens worked at ZCMC in 2019, of which 1,052 were women and 11 were foreign nationals.
According to Gevorg Manukyan, the employees regularly undergo tests to assess their health condition, but the conducted examinations do not show the real picture of the diseases the people of Kajaran suffer from.
“People here do not even realize that they are sick. Devoting themselves to the Combine, they only work day and night by shifts. There are people who hide the fact that they are sick, and others find out about the disease when it is too late,” Gevorg says.
It is not clear how the mine affects the health of Kajaran residents, as the Ministry of Health has never conducted a targeted study. The Ministry of Health informed FIP.am that the study was postponed due to COVID-19.
According to 2020 data, the number of patients with malignant neoplasms (cancerous tumors) in Syunik Province is 1711, of which 1004 are women.
According to the Ministry of Health, in 2021 the total number of citizens with neoplasms in Kajaran was 73, 299 citizens had respiratory diseases, 17 people from Kajaran were diagnosed with allergic rhinitis.
The employees of the Copper and Molybdenum Combine have the opportunity to use health insurance, but the insurance does not cover the costs of treatment of diseases really needed by the residents, and the citizens have to go to Yerevan for medical examination and treatment, as Kajaran hospital does not have necessary equipment and specialists.
Gevorg mentions that the lack of equipment and specialists in Kajaran hospital causes additional difficulties for the residents with health problems since they have to cross a distance of 350 km to get medical help in Yerevan.
Karen Galstyan, who until recently held the position of the president of the factory’s trade union, says that he regularly receives applications from the residents, most of which refer to health problems.
“The problems we have are not included in the insurance package. People pay from their own pockets, or if the cost was high, the ZCMC fund helped,” Karen Galstyan says.
The former president of the trade union says that he tried to raise issues of workers’ rights and health with the management of the factory, but in the end he was dismissed based on his own request.
“Stone age” working conditions in the largest taxpaying enterprise in Armenia
The Fact Investigation Platform visited the Copper and Molybdenum Combine to get an idea of the working conditions offered by the largest taxpayer in Armenia.
To simply say that working conditions are far from meeting modern requirements means to underestimate the problem.
The safety and sanitary norms are not observed in the factory. Employees do not wear protective helmets, air filtering masks. They feed in the cabin next to the building. The windows of the factory are broken ․ On the one hand, this may reduce the amount of toxic dust in the area, but crosswinds, in turn, affect the health of workers.
Zangezur Copper and Molybdenum Combine ore crushing and transportation plant
The whole area is full of the remnants of some old, outdated equipment, which are covered with a thick layer of dust. On a sunny day, at noon, the air is covered with dust fog.
The workers of the factory spend their whole working day in these conditions, working in 3 shifts, spending 8 hours a day in the factory. The industrial giant never “sleeps”.
The majority of the population of Kajaran town and village works in the Combine. Few people are engaged in agriculture here.
“Apart from the Combine, there is no other job. I can say it is impossible or not profitable to engage in agriculture, because it is dusty. Probably cattle breeding and things like that have started to decline since the increase in volumes. The people of Kajaran want to stay and create something. Тhe salary is considered attractive, but it is not high either, because the food here mainly comes either from Yerevan or from Iran and is sold at high prices,” says Karen Galstyan.
Kajaran is located on the bank of Voghji river. According to the Syunik regional administration, the town of Kajaran and the village of Kajarants receive drinking and irrigation water from the Voghji River․ “Voghji 2” and “Voghji 3” small hydropower plants have been built on the river. In addition to the SHPPs, the river water is also used by the Zangezur Copper and Molybdenum Combine.
According to Gevorg Manukyan, there have been cases when the residents of Kajaran had a problem with drinking and irrigation water, but the works at the Combine did not stop, there was no problem with water there.
In response to FIP.am’s inquiry, the Ministry of Environment informed that the Ministry had given the plant a water use permit from July 1, 2016 to July 1, 2021. According to the permit, the Combine can abstract 31,400 square meters of water annually from the Voghji River for industrial purposes at a rate of 995 l/s (through gravity flow).
Later the terms of the permit were extended. With the new permit, the amount of water abstraction was also increased. With the new terms, the plant can abstract a maximum of 31,547 cubic meters of water from Voghji river at a rate of 1070 l/s from February 18, 2021 to February 18, 2024.
Our drone footage shows how the Voghji River, which should have been inundated due to the spring melts, actually dries down after water abstraction by the Combine.
The growing tailings dump
Along with the increase of production volumes, the volumes of the tailings dump operated by the Combine have also increased.
The plant’s waste and all the tailings are dumped in Artsvanik tailings dump. ZCMC has been operating the tailings dam since 1977. The design volume of the tailings dump is 325 million cubic meters, the height of the dam is 50 meters.
The area of the tailings dump is not fenced, meaning the animals can enter the area without hindrance, which they effectively did at the time of our filming works. In the other part of the tailings dump, earthworks were carried out, probably to extend the area.
Artsvanik tailings dump in 2004-2021
During the last 17 years, only the area of Artsvanik tailings dump has doubled and even approached the neighboring villages. Twenty years ago the nearest village to the tailings dump (Chapni), was about 2 km away, while today the distance between the tailings dump and the village is 350-400 meters.
This is evidenced by the photos taken through the Google Earth software.
Who are the shareholders of the Copper and Molybdenum Combine?
As a result of legislative amendments made within the framework of the Extractive Industries Transparency Initiative (EITI), declarations on the real owners of companies operating metal mines were published in 2020. However, in fact, names of only 37.5% of the shareholders have been made public, while in the case of the other 62.5% it is only mentioned that the Combine is the owner of its issued shares.
According to the declaration, Thomas Peter Hall owns 12.5% of shares, the former Russian Minister of Health and Social Development Mikhail Zurabov owns 12.5%, the other shareholder is М.P., who owns 7.5%. Narek Ambaryan is the 2.5% shareholder of the factory, Karen Hakobyan (the brother of MP Vahe Hakobyan from the Armenia Alliance) also has a 2.5% share. The statement also mentions the names of Vahe Hakobyan, Johannes Bhatt and Jonathan Hieronymus, but there is no information about their share. Presumably, their share has not reached 10%, in which case the law does not oblige shareholders to submit information.
Government as a shareholder: Waiting for a new copper smelter
In 2021, the subsidiary of GeoProMining Armenia, the Industrial Company, donated 25% of the company’s shares to the government. Industrial Company JSC owned 60% of ZCMC’s shares, and the 25% donated to the government made up 15% of the Combine’s total capital. The owner of the “Industrial Company” is Russian billionaire Roman Trotsenko, who during a meeting with Prime Minister Nikol Pashinyan in October 2021 said that he intends to build a new copper smelter in Armenia in the coming years, which will make Armenia more competitive in metallurgical products market, allowing the country to export copper instead of concentrates and raw materials.
In response to FIP.am’s inquiry, the Ministry of Territorial Administration and Infrastructure informed that the investment program for the construction of the copper smelter is planned to be implemented by December 2026, but the location has not been decided yet.
According to the charter of the Copper and Molybdenum Combine, all the shareholders of the company have the same rights and responsibilities.
The shareholder has the right to participate in the management of the company, to receive a dividend from the profit from the company’s activities, to receive information about the company’s activities, to have access to company documents. Therefore, as a shareholder, all these rights are enjoyed by the government.
The response to FIP.am’s inquiry on how much profit the government received from ZCMC after becoming a shareholder and where it was directed was as follows: “The results of the company’s activities in 2021 are subject to finalizing until July 1, 2022. Therefore, there is no information on the formation of annual dividends in proportion to the state share.”
The government, in its turn, transferred its share in ZCMC to the Armenian National Interests Fund (ANIF) for trust management. ANIF was founded in 2019, and the chairman of the board of directors is Tigran Avinyan. The fund has not submitted any annual report since its foundation.
FIP.am also sent an inquiry to ANIF regarding the dividend received from the Combine, in response to which they informed that the Zangezur Copper and Molybdenum Combine had not yet paid the dividend.
*The Fund also informed the Fact Investigation Platform that, as a share manager of a minority shareholder, ANIF does not participate in the aspects of ZCMC management that are introduced in the article.
“At the same time, we should emphasize that the published evidence, if true, highlights the multi-layered issues that have accumulated over the years and have not been resolved in the ZCMC, and solutions to which we expect from the new majority shareholders of the ZCMC,” the ANIF response reads.**
ZCMC as a major taxpayer in Armenia: Profits, taxes paid, social programs
Zangezur Copper and Molybdenum Combine is one of the largest taxpayers in Armenia. In 2021, it ranked first among 1000 largest taxpayers of Armenia. According to the data published by the State Revenue Committee, in 2021 the Combine paid AMD 48.8 billion to the state budget, in 2020 – AMD 42.9 billion (i.e. in 2021 the taxes paid by ZCMC increased by AMD 5.8 billion compared to 2020), in 2019 – AMD 51 billion, in 2018 – AMD 51 billion, and in 2017 – AMD 18.6 billion.
According to the annual reports of ZCMC, in 2020 the gross profit of the company amounted to AMD 108 billion, in 2019 – AMD 64 million, in 2018 – AMD 96 billion, and in 2017 – AMD 89 billion.
Information on social programs implemented by the Combine is also published on the ZCMC website. Under the subsoil use contract, the company is obliged to ensure the protection of the subsoil, land, forests, water, nature, and other objects of the environment from harmful effects of the works.
The contract on socio-economic programs only states that the company is obliged to ensure the implementation of socio-economic mitigation measures in the communities directly affected by the mine after the closure of the mine, meaning that the social obligations refer merely to the mine closure programs.
According to the data published by the Combine, the company allocated AMD 7 billion in 2020 for the implementation of social programs, in 2018 – AMD 7.9 billion, in 2019 – AMD 6 billion, and in 2017 – AMD 3 billion.
Shushan Stepanyan
Sevada Ghazaryam
Khoren Grigoryan
Hakob Karapetyan
