US embassy cable - 04YEREVAN2802

UNCLAS SECTION 01 OF 02 YEREVAN 002802 
 
SIPDIS 
 
COMMERCE FOR 3150/PBRADLEY/BSMITH 
COMMERCE FOR 4201/ITA/IEP/OEERIS/BISNIS/EHOUSE 
EMBASSIES - PLEASE PASS FCS 
DEPT FOR EUR/CACEN, EB/CBA 
ANKARA ALSO FOR CFC/ SNYDER/BALLINGER 
PASS TDA-STEIN, OPIC, EXIM-TUMMINIA/PANARO 
 
E.O. 12958: N/A 
TAGS: KTDB, BBSR, BEXP, BTIO, AM 
SUBJECT: (IMI) ARMENIA, COMMERCIAL NEWS SUMMARY: 
DECEMBER 2004 
 
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SUMMARY 
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1.  This cable summarizes press reporting on commercial 
developments in Armenia for December 2004.  Major 
headlines include: 
 
-- Armenia sells Zangezur Copper Molybdenum Plant for 
USD 132 million; 
 
-- EBRD buys shares in Armenian commercial bank; 
 
-- IMF approves USD 13.7 million for Armenia; 
 
-- Slovakian company to launch the Vanadzor Chemical 
Plant in Armenia; and 
 
-- Armenia reports 10 percent GDP growth January - 
November, 2004.  End Summary. 
 
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ARMENIA SELLS ZANGEZUR COPPER MOLYBDENUM PLANT FOR USD 
132 MILLION 
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2.  Armenia's largest mining complex, the Zangezur 
Copper Molybdenum Plant, has been sold to a group of 
private investors led by the German company Chronimet. 
According to the Armenian Ministry of Trade and 
Economic Development, Chronimet acquired a 60 percent 
stake in the plant for USD 132 million and would 
control another 15 percent through the Yerevan-based 
smelter Pure Iron where it holds a controlling stake. 
Two other shareholders, each getting 12.5 percent, are 
Armenian companies Armenian Molybdenum Production and 
Zangezur Mining.  The new owners, supported by Western 
banks, including Deutsche Bank, plan to invest USD 150 
million in modernization of the plant within the next 
four years. 
 
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EBRD BUYS SHARES IN ARMENIAN COMMERCIAL BANK 
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3.  The European Bank for Reconstruction and 
Development (EBRD) and Armeconombank signed a deal in 
which EBRD would pay USD 1.2 million for a "25 percent 
plus one" share in Yerevan-based Armeconombank.  This 
is the first time the EBRD would become a shareholder 
of an Armenian commercial bank.  According to the local 
EBRD representative the bank would assist in the 
strategic management of Armeconombank and would provide 
technical assistance of 500,000 Euros to make the bank 
more reliable and introduce risk management systems. 
 
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IMF APPROVES USD 13.7 MILLION FOR ARMENIA 
----------------------------------------- 
 
4.  The International Monetary Fund (IMF) has approved 
a USD 13.7 million disbursement to Armenia completing a 
three-year lending program designed to sustain 
macroeconomic stability in Armenia.  It was the sixth 
tranche of the USD 105.3 million Poverty Reduction and 
Growth Facility (PRDF) arrangement.  PRDF funds have 
been used since May 2001 by the Armenian Central Bank 
to maintain a stable exchange rate of the national 
currency and to alleviate the country's negative 
balance of payments.  IMF officials said the program 
has served its purpose.  According to Armenia's 
Minister of Finance and Economy Armenia will implement 
another three-year program with the IMF. 
 
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SLOVAKIAN COMPANY TO LAUNCH THE VANADZOR CHEMICAL 
PLANT IN ARMENIA 
--------------------------------------------- ---- 
 
5.  The Slovakian company, SLZ, part of Sweden's 
Dividend Group, is planning to invest USD 1.5 million 
in the Vanadzor Chemical Plant in Armenia.  The 
Armenian Ministry of Trade and Economic Development 
announced that SLZ would launch the plant by February 
15, 2005.  Within the upcoming 6-8 months SLZ would 
sign an agreement with the owner of the plant for trust 
management or lease of the facility.  The current owner 
of the plant is Russia's Zakneftegazstroy-Prometey. 
The Russian company privatized the plant in 1999 and 
has invested up to USD 20 million in the enterprise, 
which has stood idle since 2002.  The Slovakian company 
was reportedly seeking at least a 51 percent stake in 
the Vanadzor Chemical Plant. 
 
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ARMENIA REPORTS 10 PERCENT GDP GROWTH IN JANUARY - 
NOVEMBER, 2004 
--------------------------------------------- ---- 
 
6.  Armenia's National Statistical Service reported 10 
percent GDP growth for January to November, 2004.  By 
the end of November, 2004 the GDP totaled 1,672 billion 
dram (USD 3.1 billion).  From January to November, 2004 
the volume of industrial production increased by 1.6 
percent compared with the same period in 2003, or 473.9 
billion dram (USD 881.4 million).  The volume of 
agricultural output totaled 412.5 billion dram (USD 
767.1 million) from January to November, 2004, 
increasing by 14.3 percent as compared to the same 
period in 2003. 
RICHTER