The significant drop in the price of copper in the international market will have negative consequences for Armenia.

In recent weeks, the price of copper has been $6,500 per ton, approaching the lowest level of the last 3 years (which was $6,037 in 2010). Last year, the price of a ton of copper was higher than $7,000, but even this figure wasn't considered advantageous — in 2012, copper cost more than $8,000 a ton. 

The mining and processing of copper ensures about 5% of Armenia's Gross Domestic Product, about 7–8% of state budget revenues, and about 40% of exports. It seems that the mining crisis won't have a significant impact on the economy, but that's not so. The 2009 crisis showed that major mining companies are essential for the system — several hundred small- and medium-sized businesses depend on their work.

In 2009, the Kajaran copper and molybdenum factory was able to continue its work only due to budgetary loans. According to some estimates, if the price of copper goes below $6,000 and fuel doesn't get any cheaper (since fuel is the most expensive element of the mining sector's costs), then the majority of copper mines will become not profitable. Also very important for Armenia's financial stability is the fact that significant foreign exchange resources are obtained from the export of copper concentrate.

The drop in the international price of copper is believed to be tied to the slowdown of China's economic growth, which is the number one consumer of copper in the world. But some experts believe that the fall in copper prices is only temporary.

Commerzbank notes in its report that there are no fundamental factors for the drop in prices; on the contrary, there isn't even a deficit in this market, which sooner or later would have an impact on the price. Furthermore, the drop in price will stop investment in this sector, which will aggravate the deficit. Nevertheless, even according to the most optimistic estimates, recovering the price of copper to its 2012 level is not expected. 

The situation becomes more complicated for Armenia also by the fact that Teghut's copper and molybdenum mine is expected to be exploited this year. According to the Central Bank of Armenia forecast, this will be significant in terms of accelerating Armenia's economic growth, assuming the relative stability of the international price of copper.

But, as we've seen, such forecasts are unreasonably risky. Only one month has passed since the Central Bank's forecast, and the baseline scenarios on which these forecasts are based already need to be reviewed.