As part of its “Mining Industry and Law” project, Iravaban.net continues its innovative series of articles dedicated to raising awareness about Armenia’s mining industry development strategy. Through these articles, we will present the Republic of Armenia’s mining industry development strategy to the public using accessible methodology and innovative tools. The second article in the series, “Current State of Armenia’s Mining Industry: Key Indicators,” will familiarize readers with the current situation and main indicators of the sector.
The Current Role of Armenia’s Mining Industry
Armenia’s mining history dates back to the mid-18th century, when copper extraction began in the Alaverdi and Kapan mines. Over decades, the sector has evolved into one of the pillars of our economy, making steady contributions to economic growth, employment, and state revenue generation. Along this long path, mining has transformed from simple extraction into a modern, complex technological process.
Thanks to the diligent work of Armenian geologists and specialists, enormous experience and knowledge have been accumulated over decades. The Republican Geological Fund today preserves exceptional materials over a century old, which are invaluable for studying our country’s subsoil.
Armenia’s mineral wealth is exceptional in its diversity. Our country is known not only for metallic minerals but also holds leading global positions in non-metallic mineral reserves. Each region has its unique “mineral passport.” Syunik is rich in copper and molybdenum, Lori in copper and polymetals, while Aragatsotn and Kotayk regions are known for their construction material deposits.
Armenia’s mineral resource wealth is impressive. Mining companies operating in our republic have copper-molybdenum ore reserves for about 100-120 years, gold ore for 25-30 years, and lead-zinc ore for 20-25 years. Besides the main metals, our ores also contain rare and dispersed metals – rhenium, selenium, tellurium, cadmium, indium, gallium, thallium, and bismuth.
No less impressive are the non-metallic mineral reserves. Perlite and diatomite reserves in Armenia amount to about 3 billion cubic meters. Our country is also rich in tuff, pumice, zeolites, volcanic slag, basalt, granite, and marble. All these resources play an important role in construction and industrial development.
Production Volumes: What Are We Extracting?
2021 marked significant growth in the mining sector. Mining industry production volume reached 587.9 billion drams, growing by 45.9% compared to the previous year. The main driver of this impressive growth was the increase in metallic ore extraction volumes.
Metallic ore extraction accounts for 96.7% of the sector’s production. This shows how crucial metallic mining is for our country.
Copper extraction is particularly noteworthy. In 2021, copper ore extraction volumes constituted 35.4% of total metallic ore extraction, growing by 61% compared to the previous year. This demonstrates the sector’s dynamic development and strengthening of our country’s position in the international market.
Non-metallic mineral extraction, though smaller in volume, also plays an important role. In 2021, extraction volumes in this sector amounted to 18.8 billion drams, with sand and gravel extraction accounting for 73.5%.
GDP Contribution: How Does the Sector Contribute to Economic Growth?
The importance of the mining sector for Armenia’s economy cannot be overestimated. In 2021, the sector’s direct contribution to GDP was 6.1%, which is 2.5 percentage points higher than in 2019. This means that out of every 100 drams produced in Armenia, 6 drams were directly created in the mining sector.
However, the sector’s real impact is larger. Mining has an economic multiplier effect of 1.8. This means that every 1 dram created in the sector generates an additional 0.8 drams of value in the economy. As a result, mining’s total direct and indirect contribution to GDP reaches 11%.
State Revenue: How Does the Sector Contribute to the Country’s Budget?
Mining is one of the most important sources of state budget revenue. In 2020, companies engaged in metallic mineral extraction alone paid 82.2 billion drams to the state budget, 3.5% more than the previous year.
Notably, during 2016-2019, royalties constituted the largest share of taxes and payments from metallic mineral extraction companies, averaging 52%. Income tax and profit tax also had significant shares.
Employment and Wages: Social Impact
The mining sector plays not only an economic but also an important social role. In 2021, the sector directly employed 10.5 thousand people. However, the real picture is more impressive.
The sector’s employment multiplier is 5.3, meaning that each mining job creates an additional 4.3 jobs in other sectors of the economy. Thus, the sector’s total impact on employment is estimated at around 55.7 thousand jobs.
Wages in the sector are significantly higher than the national average. In 2021, the average monthly salary was 499,603 drams, which is 2.4 times higher than the country’s average wage. This means a high standard of living for sector employees and their families.
Exports and International Trade
Mining is one of Armenia’s leading export sectors. In 2021, mineral product export volumes reached 982 million USD, constituting 32.5% of the country’s total exports. This is 20% more than the previous year’s figure.
Copper concentrate dominates the export structure, accounting for about 80% of mineral product exports. In 2021, copper concentrate export volumes grew by 27%, indicating stable demand for our products in international markets.
About the Next Article
Don’t miss the third article – “Mining Sector Achievements, Current Issues, and Reform Opportunities” in Iravaban.net‘s innovative series dedicated to raising awareness about the mining industry development strategy of the Republic of Armenia, as part of the “Mining Industry and Law” project. It will reveal the sector’s strengths and weaknesses, present existing opportunities and challenges, and address tools and mechanisms that will help achieve sustainable development in the sector.
