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Mining Giant Becomes Armenia's Largest Taxpayer


YEREVAN -- An increase in world prices for base metals has made a German-owned mining company the largest corporate taxpayer in Armenia, RFE/RL's Armenian Service reports.

Data from the State Revenue Committee (SRC) released on August 9 shows the Zangezur Copper and Molybdenum Combine (ZCMC) paying more than 15 billion drams ($41 million) in various taxes and duties in the first half of this year, compared with the 5.5 billion drams it paid in the same period in 2010.

The surge is the result of a strong rally in the prices of nonferrous metals -- particularly molybdenum -- on world markets this year. The price of molybdenum had plummeted during the 2009 global recession.

Armenia's export-oriented mining and metallurgical enterprises have strongly benefited from this recovery. The National Statistical Service (NSS) has reported double-digit gains in those companies' outputs this year.

First-half exports of metal ores and ore concentrates were up by as much as 52 percent for a total gain of $204 million. Armenian companies also exported $191 million worth of base metals, a year-on-year increase of 21 percent.

This, in turn, has reflected positively on the country's overall macroeconomic performance. According to government projections, economic growth in Armenia will accelerate to around 5 percent this year.

The ZCMC, which is based in the southeastern town of Karajan and majority owned by the German metals group Cronimet, was in fifth place on the list of the country's leading taxpayers in 2010.

It was topped last year by, among others, ArmRosGazprom (ARG), the Russian-controlled national gas distribution company.

With first-half tax contributions totaling 12.7 billion drams, ARG is second in the latest taxpayer rankings after ZCMC.

ARG is followed by the Alex-Grig company of government-linked tycoon Samvel Aleksanian. It controls lucrative imports of wheat and other basic foodstuffs. The tax and customs authorities collected 8.2 billion from Alex-Grig in January-June.

Also among the leading taxpayers are Armenia's three mobile-phone operators, its largest fuel importing and tobacco firms, the national electricity utility, and the Metsamor nuclear plant.

The government's overall tax revenues rose by 10 percent, to 314.8 billion drams, in the first half of 2011. Armenia's 1,000 largest companies accounted for almost three-quarters of this sum.

"Tax revenues are definitely growing faster than the economy," Samvel Avagian, an independent economist, told RFE/RL. "But it would be premature to conclude that the economic situation has improved considerably."

The government claims to have significantly toughened its crackdown in recent months on widespread tax evasion.

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