Interview of the Vice-President of Vallex Group Companies Sahak Karapetyan to “Sputnik Armenia”

Since January 12, 2018, the Teghout Copper-Molybdenum Plant has not been operating. How to restart it? For this you need to answer the question: how much property is left there?

In September the rights to the shares of “Teghout” CJSC, which owns the rights to operate the Teghout copper-molybdenum deposit, were transferred from the “Vallex” group of companies to VTB Bank (PJSC). A subsidiary of the bank became the direct owner of the shares, and decided to change the current composition of the Board of Directors of Teghout, and then change the head of the executive body – the company’s General Director. All of this was carried out without prior notice. According to Sahak Karapetyan, the former General Director of “Teghout” CJSC, members of the Board of Directors and General Director learned about the above-mentioned decision of the sole shareholder of “Teghout” CJSC only after corresponding registration with the Agency of the State Register of Legal Entities of the Republic of Armenia.

“I had some questions in connection with the lack of notice of dismissal. But now the question is not even that. In the process of vacating the position, at the stage of handing over тхе responsibilities and documents, I demanded a full inventory of all assets and liabilities of the company, with the involvement of outside organizations and specialists, and the establishment (recording) of the actual condition and functional performance of the entire facilities (namely, equipment and assemblies of the factory and other infrastructure facilities, quarry and general industrial equipment, property stored in warehouses, and etc.) and draw up of proper acts on the transfer and acceptance of property. To give a complete picture it should be noted that the aggregate cost of spare parts, current material assets and end products stored at the warehouses of “Teghout” CJSC at the time of my dismissal was more than 32 million US dollars. Much to my regret, the new General Director ignored all my statements and e-mails about the request for the above inventory. According to my information, no inventory has been carried out so far,” says Sahak Karapetyan.

“All equipment and assemblies of the factory, as well as support infrastructure facilities require constant planned maintenance and care, and implementation of actions to keep them operational, recommended by the respective manufacturers. All quarry equipment (excavators, dump trucks, loaders and satellite vehicles, etc.), and “Teghout” CJSC has dozens of such units, require constant attention and ongoing maintenance, even when they are not actually in operation. Failure to comply with the regulations and recommendations of manufacturers of equipment and facilities can lead to loss of function. This is especially important in the winter time, because, depending on the weather, the risks of property damage increase dramatically as a result of delayed and/or incorrect actions of the staff. As of today, I do not have any objective information about the state of the equipment and/or facilities of the plant.

According to various rumors, on the eve of winter, the new management team of “Teghout” CJSC did not ensure the implementation of all the necessary preparatory actions, which undoubtedly can lead to negative consequences which will be visible only on the stage of launching the production cycle. You must admit that this is not a very good “legacy” for potential investors who are ready to take over the management of the plant, be it “Vallex” or anyone else. It is like buying a house, not knowing whether the plumbing is working and whether the roof is leaking,” he added.

“Of course, this is also important for my reputation. But as you can see, this is not purely a personal matter, but a matter of the work of the plant,” Karapetyan stresses.

Total investments in the Teghout Copper-Molybdenum Plant (the second largest in Armenia) at the construction stage reached about $ 352 million. Of which about 308 million are loans of “Teghout” CJSC attracted from the banks of VTB Group, and another 44 million are the own funds of the Vallex group of companies. At the end of August 2018 (before VTB took the shares) “Teghout” CJSC (at that time, being a member of the Vallex group) has paid about $ 110 million in loans.

A little over a year ago, in early January 2018, “Teghout” CJSC temporarily suspended the operation of the Teghout Copper-Molybdenum Plant. The basis for the suspension of the plant’s activity was the preliminary data on the risks to the stability of the tailings dam, obtained as a result of relevant studies conducted by the engaged foreign specialized organizations. Later, these preliminary findings were confirmed by the final conclusions of the consultants engaged. Based on the data obtained, “Teghout” CJSC made a difficult decision to temporarily stop ore mining at the Teghout copper-molybdenum deposit and began to work out the necessary measures to increase the stability and reliability of the tailings dam. For this, too, outside consultants were engaged. Taking into account that Armenia is located in a not quite safe seismic zone, all structures for tens of millions of tons must be secure, for what is called, 150%.

The idle time of the plant also led to difficulties in servicing existing loans. This has given rise to a number of issues and problems that “Vallex” and VTB have been handling in various courts, including the London International Arbitration Court.

“I cannot comment on the course of judicial/arbitral proceedings and their details, since this contradicts the norms of judicial ethics applicable in the respective courts. I can only assure you that the existence and/or progress of court/arbitration cases between the companies of the Vallex group and VTB Bank do not in any way prevent the possible launch and further work of the plant. The precondition for the launch of the plant is the elimination of all the problems that became the basis for stopping it. In particular, before launching the production cycle, “Teghout” CJSC and its current management must ensure that repair, restoration and construction and strengthening works are carried out at the tailings dam. These actions/works should ensure the seismic and static stability of the existing dam and shall be performed taking into account the seismic zonality of the location of the object, as well as all the requirements of the Armenian Legislation.At present, we do not have information that the company has begun to address the above tasks, which are an imperative precondition for the launch of the plant.

At the same time, some forces, pursuing the goals and objectives not entirely understandable for us, misinterpreted the situation and all the facts. There are rumors in the society that we deliberately started judicial/arbitration proceedings to prevent the launch of the plant. The answer to this is very simple: the Vallex Group of Companies and/or its separate members did not sue and did not impose property requirements on “Teghout” CJSC. Separate companies of the Vallex group are parties to various court/arbitration cases and oppose VTB Bank, trying to protect their rights and legitimate interests by all legal methods. Attempts to present this as “sabotage” and “obstruction to the launch of the plant” are pure manipulation. The Vallex group of companies and/or its separate members pose no obstacles to the launch of the Teghout Copper-Molybdenum Plant. I want to hope that “Teghout” CSJC and its current management will be able to ensure the earliest possible implementation of all the construction and strengthening works necessary for the launch and further continuous work of the plant. This is our main task,” Karapetyan stressed.

It bears reminding that the copper smelting plant, the town-forming enterprise in Alaverdi, is also currently idle.

This plant is also a member of Vallex group. Employees here have not yet been dismissed and negotiations are held with the Government to resume the work. Negotiations on the plant and the mine are not very simple. And one verbally inflates here the extra “heat” then the factory furnaces can actually remain cold. With all consequences for more than a thousand people who are yet listed at the plant and mine.

Aram Gareginyan