Armenia’s biggest mine says sanctions ‘don’t apply’ as US blacklists Russian operator

By Mark Dovich

Armenia’s biggest mine said Thursday that new U.S. sanctions on the Russian company that owns it do not apply to it.

“No international sanctions are applicable to the company,” the Zangezur Copper-Molybdenum Combine said in a press release.

A few days earlier, the State and Treasury Departments blacklisted Geopromining and a number of its subsidiaries, along with some 500 other entities in Russia and around the globe, in a sweeping sanctions package timed to mark the two-year anniversary of Russia’s full-scale invasion of Ukraine.

In a press release last Friday, the State Department said Geopromining, which ultimately owns the Zangezur Combine through a web of subsidiaries, forms part of a “network of Russian mining companies connected to” Roman Trotsenko, a prominent oligarch with ties to President Vladimir Putin.

Significantly, the subsidiaries that directly operate the Zangezur Combine were not sanctioned.

What’s the Zangezur Combine?

The Zangezur Combine paid nearly $175 million in taxes in Armenia last year, making it the single biggest contributor to the country’s state coffers and accounting for more than 3% of the government’s total tax earnings. One of the world’s top molybdenum producers, the enterprise employs some 4,000 people in Armenia’s southernmost Syunik region.

Trotsenko became the Zangezur Combine’s largest shareholder in September 2021, purchasing the majority of shares in the enterprise and then immediately ceding a sizable stake to the Armenian government without explanation. Armenian officials have repeatedly refused to comment on the matter.

Then last November, the Zangezur Combine claimed it had cut all ties with Trotsenko, listing its biggest shareholder instead as Svetlana Yershova, a Russian citizen with known business links to the oligarch.

The Zangezur Combine has long had an opaque ownership structure that has made it difficult for reporters and the general public alike to understand who ultimately controls — and benefits from — the operation.

Days after the mine said it had ended its business relationship with Trotsenko, the United States sanctioned nearly two dozen entities associated with the oligarch, including his holding company, even while holding off on blacklisting Geopromining until last week.

Aside from the Zangezur Combine, Geopromining also operates Sotk, Armenia’s biggest gold mine, and a number of other mining-related enterprises in the country, also through subsidiaries. Operations at Sotk, which straddles the border between Armenia and Azerbaijan, have been largely suspended since last May due to repeated cross-border shelling.

What’s the context?

Since Trotsenko granted shares in the Zangezur Combine to the Armenian government, the state has moved to take stakes in a number of other large and strategically important enterprises, including the Amulsar gold mine, another key mining project.

In January, Prime Minister Nikol Pashinyan’s cabinet formally approved a measure allowing the government to take a minority stake in Amulsar, a long-stalled project embroiled in environmental controversy. Still, the mine has not yet been put into operation.

Armenia has considerable deposits of copper, gold, and molybdenum, and the mining industry is one of the country’s biggest sources of employment and government revenue. Many of Armenia’s mines are ultimately controlled by Russian companies.

Has the US sanctioned Armenia before?

Since the start of the war in Ukraine in February 2022, the United States has blacklisted only a handful of Armenian entities, despite specifically namechecking Armenia just months after the war began as one of several “transshipment points” used by Russia to evade sanctions.

Last May, the United States blacklisted Medisar, one of Armenia’s largest industrial and laboratory chemical importers, for reported business dealings in Russia. Several months before that, the country sanctioned Milur Electronics, alleging it was being used as a front for a Russian microelectronics producer, and imposed export controls on Taco, saying it was supplying components to a Russian defense procurement firm.

Armenia’s economy expanded by 8.7% last year and 12.6% the year prior, according to official figures, fueled by massive inflows of capital and labor from Russia and a surging re-export business. Trade between the two countries topped $7 billion last year, an all-time record.