“The Challenges and Problems of Responsive and Transparent Management of Mining Industry”
28.03.2017
13:00
A discussion was hosted by Media Center on March 28, entitled “The Challenges and Problems of Responsive and Transparent Management of Mining Industry”.

The speakers of the discussion were Khachik Hakobyan, RA Deputy Minister of Nature Protection,Armen Stepanyan, Sr Manager Sustainability at “Lydian Armenia” Company, Arthur Grigoryan, Head of “Eco Right” NGO.  

Mining is one of the fast growing sectors of Armenia's economy. At the same time, there are many obstacles related to the regulation and transparency issues. In 2017, the Extractive Industries Transparency Initiative (EITI) approved Armenia’s EITI candidature application and Armenia attained the EITI candidacy status. EITI is a global Standard to promote the open and accountable management of natural resources which, according to the speakers, will significantly foster the regulation of the mining industry.

As a reply to the question what Armenia would gain in the case of the membership in EITI, Khachik Hakobyan said: “The state confirms its willingness on the highest level to mining industry cooperate with public and civil society within the mining industry to ensure that all financial reports are transparent and accessible to the public. Thus, we agree that the international best practice is localized in terms of technologies.”

He added that the introduction of such standards would create a positive background attracting foreign companies.

Arthur Grigoryan positively assessed the implementation of this framework aimed at regulating the mining industry, saying: “The main value of this initiative is not only to improve the transparency in the industry but the fact that the civil society in addition to the others obtains the right to participate in the management of the industry. Decisions are made by consensus in multi-beneficiary group, involving the representatives of civil society, and those decisions concern the management of the industry, ranging from legal field to institutional issues.”

As a reply to Media Center’s question what is the interest of mining companies to join this initiative Armen Stepanyan said: “Such initiatives not only improve the transparency of the industry but also define equal game rules for everyone. More transparent and equal rules of the game are for the benefit of business.”

There are many mines in Armenia but the scale of mining is small:

What promptes the Swedish experience of the mining industry?

Referring to the issues in the mining industry, Artur Grigoryan drew attention to the fact that the industry needs a legal and institutional regulation in Armenia which will prevent the future operation of mines contradicting and opposing public interests.

“Small and medium-sized mines are not useful in terms of the level of public interest to that extent that to have the right to exploit them. It seems that there is a common understanding that small and medium-sized mines cause more social protest, more damage, environmental issues than the specific economic benefits.”  

Khachik Hakobyan ensured that the issue is at the core of the state attention and measures are taken.  

“Along with the mining concept the concept of natural resources is being elaborated, which enables not to diverse forest and  ecosystems in general, biodiversity from the natural resources being attractive for mining. We should be able to prove and make clear that if you have a natural attraction in the form of an ecosystem, we cannot have a mine here, we can generate the same income,” Khachik Hakobyan said.

Stepanyan addressed the question of whether it is true that the tax burden on the mining industry is very light, as a result of which the  producers get superprofits and the state – very little.

“If we look at the developed mining countries and compare Armenia with them, the taxation is Armenia is on the middle and upper-middle ranks. This is evidenced by the various international studies, including studies made by PWC Company,” Armen Stepanyan said. 

Arthur Grigoryan drew parallels with the Swedish example of the mining industry, indicating that this model should be a exemplary for Armenia. 

“First of all, we need to completely figure out what the use of mineral resources will give Armenia. A general policy should be developed on how to implement the use of mineral resources, in to bring the overall economic development order except for taxes. Sweden almost entirely uses its subsoil for a final product, and we sell concentrate. We do not have a production of cables, why don’t we have? Why the final production is not organized? This is an institutional problem,” Arthur Grigoryan said.  

To watch the video, follow the link.  

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