Monday, 16 December

The Statement of the CRONIMET Mining AG regarding the issue of the Kajaran village and adjacent territories



Dear Citizens,

CRONIMET Mining AG, being the main shareholder of the Zangezour Copper Molybdenum Combine CJSC hereby would like to state its vision on this issue related to the situation developed as a result of the Government of Armenia Decision, in accordance to which specified communities of the Syunik marz have been declared eminent public domain. 

The above-mentioned Decision of the Government of Armenia has lead to contradictory reactions from a number of public groups and private individuals with environmental and other focuses, and, in particular, they argue that:

-        The declaration of the above territories as eminent public domain with their subsequent transfer to a private mining company for development is not legitimate;

-        The relocation of Kajaran village populations promotes migration from RA, along with the weakening of the bordering regions;

-        The expansion of the mining activities at the Kajaran village territory is not conditioned by the production necessity and pursues solely company profit maximization goals.

The Zangezour Copper Molybdenum Combine has been established in 1951 with the purpose of the Kajaran deposit development. The deposit extends itself to the territory of the current mine and furthers to the left bank of the Vokhchi River, where the Kajaran village is located. The Combine and the town of Kajaran are situated downstream to the River, where more than 7,000 people live.

The Zangezour Copper Molybdenum Combine CJSC is the leading production company of the Republic of Armenia. Its production is being fully exported to international markets, thus ensuring substantial currency inflows to the Republic of Armenia. Along with that, the proceeds earned at the international markets are being mainly spent within Armenia. As such, in the year of 2011, the ZCMC has rendered services and procured necessary goods from 347 local companies in the amount totaling to AMD 44.2 billion. Moreover, the ZCMC directly employs 3200 people and is practically the town-forming enterprise ensuring higher than average in the country living standards for its employees and their families.

It is further worth mentioning, that the molybdenum concentrate produced at the company is being totally processed in the Republic. The molybdenum concentrate processing companies are located in Yerevan and it their turn ensure the employment of more than 1,000 people. Therefore, there is no doubt that the continuous operations of the ZCMC guarantee the economic stability and sustainable development not only of the Syunik region, but also of the Armenian economy in general.

CRONIMET Mining AG fully realizes its responsibility as a strategic investor and perfectly acknowledges the fact we have been entrusted with the national wealth of the Armenia. Therefore, together with the management of the company, we have designed and continuously implement the policy of the balanced approach to the ore mining on extended time horizons without compromising the ability of future generations to meet their own needs.

Furthermore, we could proudly state that the company has fully met its investment commitments undertaken. As a result of the ambitious large scale investment program totaling to USD 500 million, implemented without production process interruption, we have achieved full modernization of the ZCMC production facilities in line with the best international practices, thus ensuring our sustainable development efforts now and long into the future.

In addition, we pay special attention to the environmental component of the CZMC operations, and despite the severe legacy after the privatization we have performed complex works to improve the ecological situation. As such, the hazardous molybdenum roasting production has been shut down, measures to replace the obsolete tailing pipelines and recultivate the old tailings have been undertaken, as well as the assessment of the stability and make the necessary refinement of the existing hydro technical infrastructure have been done with the proper advice rendered from the leading international companies. In line with the requirements of the existing Armenian legislation, we nevertheless do not rest on our laurels. In the framework of the environmental stewardship policy, we are aiming to achieve the full compliance to the strictest international requirements in the medium-term period.

Special importance and care is given to the corporate social responsibility. Over the difficult crisis period, the shareholders and the management of the ZCMC have found out the necessary means and have revealed all possible reserves thus ensuring the uninterrupted operations of the Combine. As oppose to other mining companies as in Armenia and abroad, we managed to avoid cut offs and pay wages without a single day delay under the drastic decrease of metal prices at the global markets.

In accordance with the ZCMC Shareholders decision, significant amount are allocated to finance vast social programs (not less than AMD 3 billion annually), being implemented throughout the Armenia. Taking into consideration the importance and value input of its employees in the process of the Combine’s production capacity expansion, modernization and uninterrupted operations, 5% of company’s annual net profit is being paid to its employees as a bonus for annual results, which makes the ZCMC employees the direct beneficiary of the company’s success.

Having tabled the above, we would like to further emphasize to the public the following. The expansion of the current mine is mainly conditioned by the long-term planning of the ZCMC operations; it has been planned since the soviet period and is envisaged in the current concession agreement. The operations of the Combine are in no way force the migration of the population out of the region, just in contrary, have a strategic importance for strengthening the bordering region. Thousands of ZCMC employees along with the vast number of regional satellite companies and their families link their future and well-being with their Motherhood and have no intention to leave. The employees are fully occupied at their workplaces requiring highest professional standards and qualifications being transferred from generation to generation. Undoubtedly, the ZCMC is the main pride of its employees and is the quasi-national enterprise. As such, we do believe that the declaration of the eminent public domain of the adjacent territories is more than legitimate guaranteeing further advancement of the industrial giant.

Instantaneously, we would like to highlight that the discussions of the above-mentioned issue by several groups and individuals are not always constructive by their nature and do not necessarily reflect the real situation. Despite that, we do welcome constructive criticism and dialog with all parties involved to allow ensuring the best possible solution for all existing issues.

In conclusion, CRONIMET Mining AG fully confirms its approach and firm adherence to the principles of civil rights and democracy leading to mutual consent. The management of the ZCMC, being fully authorized by its shareholders, will persist on finding mutually compromising solutions, ensuring legitimate rights and interests of the parties. 

The Representation of the CRONIMET Mining AG in the RA


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