The World Bank said on Tuesday that the mining industry could be a critical source of exports and a key driver of economic growth for Armenia.
Jean-Michel Happi, the World Bank's country manager for Armenia, said that mining is risky because exploration often comes up empty, investments are significant, commodity prices can change dramatically and governments can change policies and taxes. Just because a business is risky, does not mean it should be irresponsible.
"Many of these risks can be mitigated or eliminated," Happi said. "This requires proper policies, laws, regulations, careful implementation, and planning for life when the mine closes - all of this even before the mine opens. Supporting policies, such as easy access to updated geological information and predictability in transferring licenses, reduce the risk in exploration."
Happi said that investment risks can also be mitigated by governments and companies working together to lower infrastructure costs. The collaboration could offer benefits for both producers and consumers.
"Over the past few years, the World Bank has supported Armenia in developing a new mining code aligned with international standards," Happi said. "Major changes were introduced in the fiscal regime. As a result, fiscal revenues from mining royalties reached $39 million in 2012 and $45.3 million in 2013, thanks also to favorable commodity prices."
Fiscal revenues from mining royalties were $17.9 million in 2011 under the previous taxation regime.
Happi also mentioned the Law on Environmental Impact Assessment, a piece of legislation that has already attracted new investors. He said the World Bank Group looks forward to expanding its partnership with Armenia.
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