However much the country’s statesmen claim that the economic crisis will not leave its mark on the economy of Armenia, it is nevertheless already being felt in the region of Syunik, Armenia’s gateway in the south. 

According to information at our disposal, the directorate of the Deno Gold Mining Company (DGMC), the former Kapan Mining Enrichment Plant, has warned 500 of its employees that they will be let go come December 15th.

Rubina Ter-Martirosyan, DGMC’s Community and Media Relations Officer, has verified these employee lay-offs noting that they are linked to falling international market prices of precious metals.  

Ms. Ter-Martirosyan had difficulty answering when we asked her what the international price of copper needed to be for the company to operate at a profit and for the lay-offs to be averted. 

“Most likely the current going price would have to increase by some 70%” one of the company’s employees responded. In any event the company still has not yet informed the Kapan Regional Employment Center of the impending cutbacks. Ms. Ter-Martirosyan verified that 148 workers will be cut and the contracts of more than 200 will not be extended. 

According to the company’s spokesperson this is not viewed as a drastic cutback given that as of October 1st the company had 1,526 employees. 10% would need to be laid-off for the move to be considered drastic. 

Ms. Ter-Martirosyan stated, “While it isn’t a problem, we’ll contact the Employment Center.” She added that if large-scale exploration work gets underway the workers will be rehired. 

Perhaps as a note of consolation Ms. Ter-Martirosyan noted that some in management positions as well as foreigners would be loosing their jobs. One theory making the rounds in the Kapan rumor mill is that the cutbacks are a pretext for the company to once again be sold, this time to a Russian concern. 

In 2002 the Kapan Mining Enrichment Plant was privatized and sold to the Swiss Deno Corporation. Three years later, in 2005, ownership passed to “Vatrin Investment Ltd”, an off-shore company registered in the British Virgin Islands. 

As of 2006, the Canadian firm Dandee Precious Metals has owned 80% of DGMC stock. Ms. Ter-Martirosyan categorically denied that the company would be sold to the Russians. A few months ago the company’s owner declared that large-scale investments were in the pipeline. The DMGC representative stated, “Naturally, some of those investments were allocated, but let me again reiterate that companies even larger than ours are being caught up in the maelstrom of the international crisis. The fact that we are still subsidized by our parent company  and not fully self-supporting only exacerbates the problem.” 

It turns out that DGMC’s directors are reluctantly admitting to the impending lay-offs of some 350 workers. However, if the company is still being subsidized why would the fall of international precious metal prices have an impact on it to such a degree? 

In essence, the residents of Kapan shall have to wait, twiddling their thumbs, for a foreigner to show up, lay them off and then, locking the doors of the factory to return home to wait for a favorable rise in precious metal prices. Furthermore, according to company workers, specialists from abroad are paid several times more than they are. Local workers state that while they receive an average of 120,000 – 150,000 drams per month, foreigners receive up to $20,000 per month. We tried to verify these figures with Ms. Ter-Martirosyan who tersely replied that we were no longer engaged in journalism but in local rumor mongering and that even Deno’s Executive Director doesn’t receive a $20,000 salary. 

A Deno employee who wished to remain anonymous told us, “They allegedly come here to work. Once every two weeks they go on ‘business trips’ back to their countries of origin at the company’s expense and the company even covers their apartment rental expenses in Kapan. OK, fine, we don’t come out and say – Hold on, isn’t it evident that they are living here at our expense and on the riches that come out of our mines! But they still threaten us with lay-offs.” There’s also another factor to take into account; many employees have taken out bank loans and made credit purchases that they will no longer be able to pay off once without a steady wage. 

This Kapan enterprise has been and will be the economic pulse of the town and its fate must be of concern to all, from the owners to those in government. Otherwise we will be witness to a social upheaval in Kapan. Talking about plans for the future Ms Ter-Martirosyan stated that the company has drafted a project with the OSCE that will assist small and medium-sized businesses. She claims, “This will essentially alleviate the social situation.” 

According to information at our disposal, workers at the Agarak Copper-Molybdenum Combine will not escape dismissals either. The plant’s Georgian owner has also stated that a cut in production levels is expected and that it is currently operating at a loss. 

P.S.  Following the privatization of the former Kapan Mining Enrichment Plant, Canadian-owned Deno Gold Mining Company had been providing monthly financial aid to company pensioners with work-related disabilities through the Kapan Regional Social Services Agency (KRSSA). These disabled pensioners were greatly surprised when informed by the KRSSA that they would no longer be provided with financial assistance since Deno Gold Mining Company had not transferred the required sums. “The services we receive at the KRSSA are quite satisfactory and thus we were surprised that they are delaying the payments,” stated Ilya Barseghyan, one of the disabled. She and others like her, 20 individuals in all, staged a protest rally in front of the company’s gates a month ago demanding that the company restore the “historical justice.” Aida Poghosyan, the company’s Chief Accountant, met the pensioners and assured them that the provision of monthly sums allocated as an aid will continue and the sums of the missed months will be provided to the pensioners. According to Ms. Poghosyan, the only reason for the termination is that the company is displeased with the conduct of the KRSSA. “I will not go into details, but we will draft a new procedure and come up with a new framework for distributing these sums.”