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Vahe Hakobyan: Investments must create jobs

ArmInfo’s Interview with Vahe Hakobyan, Governor of Syunik region of Armenia

  • by David Stepanyan

  • Wednesday, April 16, 20:38


What is the key problem you have been resolving since you were appointed Governor of Syunik region in May 2013? 


Our key problem is unemployment that makes up 14.9%. Since the very first day our team have concentrated efforts on reducing the social tension in the region. This policy completely meets the strategy of the Armenian Government. In this light, we started elaborating the concept of the region’s socio-economic development for 2014-2017. We involved foreign experts to borrow their experience and apply it with due regard for Syunik’s potential and advantages. The OSCE Office in Yerevan and 16 foreign embassies in Armenia, which are implementing various investment projects in Syunik and Armenia in general, were the first to respond to our proposal. We held a quite successful forum and revealed the important economy sectors for our region. So, we started paying more attention to them. The concept in not yet ready and it is being discussed with international consultants. I am convinced that the document will be ready pretty soon and we hope that implementation of the projects included in the concept will considerably reduce unemployment and social tension, and at the same time it will develop the priority directions of Synik’s economy.


Would you speak of the development priorities in detail? 


Naturally, the matter concerns the mining industry, which traditionally plays an important role in development of not only Syunik but also Armenia in general. I should say that today this industry is at a qualitatively new level. If we compare the current mining sector with the mining sector of the last period of the USSR in terms of output, quality of production, social responsibility and ecology, we will see a great difference. For instance, in the early 1990s, the Kajaran Copper Molybdenum Combine operated at full power and extracted nearly 8.6 mln tons of ore per annum. Now it annually extracts 18 mln tons of ore. We were able to achieve such results due to the up-to-date flotation and other technologies. In this light, serious funds have been invested in Kajaran and Agarak Copper Molybdenum Combines, as well as in Kapan Mining and Processing Plant. Therefore, today all the three enterprises are developing and creating new jobs. Earlier the number of employees in Kajaran was no more than 2200 people with low wages, but today the enterprise has 3500 employees with an average salary of 400 thsd AMD, needless to say about the satellite enterprises and the multiplier effect provided to the sector. Certainly, exploration is also being conducted to find new deposits.


Is it possible to combine the need for mining industry development and creation of jobs with observance of the environmental standards?    


First of all, I would say that the mining industry contains no air emissions, generally speaking. The industrial waste accumulates in the tailing dumps. This is a traditional method, which is popular all over the world. Of course, the process of reclamation should be carried out correctly, and it is being done. For instance, earlier the ore reached the tailing dump trough one pipeline, whereas now we are using two pipelines. In case the main pipeline gets out of order, the other one will be used and this will allow avoiding environmental pollution. In other words, the projects aimed at protecting the environment are constantly being implemented. We realize our responsibility and try to reduce the environmental damage to the extent possible. I can assure you that all our mining enterprises first of all take into the account the need to resolve the environmental problems and social responsibility problems. The mining sector has passed a long path and raised production to a qualitatively new level. Certainly, there are some problems, but what is being done in this field is of more importance than what is being presented to the public by some people. I think speculations on environmental issues are needless. I confess that I try to understand their motivation and sources but it is very hard to do even amateurishly. The people are trying to restrict serious discussions of serious problems to shows, creating an unhealthy atmosphere, insulting one another and hindering the constructive dialogue.


Let’s talk of the mining industry development prospects…      


The prospects are quite optimistic. The three key mining enterprises have good opportunities to increase the output even more and create new jobs. If we also take into account 80 Syunik-based small and medium-sized enterprises directly related to the mining industry, the prospects for creation of new jobs will increase. Of course, the global financial and economic crisis has made adjustments to development of our region, whose gross product’s 85% falls on mining industry. It was over the crisis-affected years that it became finally clear that the region needed full diversification in economy. Fortunately, we have already overcome that hard period and now we are outlining new scenarios and opportunities for further dynamic development of this sector of Syunik’s economy. Having studied the cyclicality of mining products’ price formation on the world markets over the past 50 years, we have come to some conclusions and the main conclusion is that it is necessary to diversify the economy of our region. The matter concerns first of all the sectors in which Syunik region will have certain advantages. These are the sectors of energy, agriculture and tourism.


How is the region planning to continue the cooperation with Ruben Vardanyan, particularly, to continue the Tatev project?


Our relations are at a quite high level, and the activity of the interdepartmental commission engaged in the program of development of the ancient historical monument of Tatev and its surroundings is direct evidence of that. We stress the need to involve the villagers in this program. The villagers of the region are a big resource, which should be used. Certainly, we consider all the proposals and ideas of our partners. After all, they are directly engaged in implementation of this project. I’d like to mention that the foundation of Ruben Vardanyan and Veronika Zonabend is also implementing socially oriented projects in the region. In particular, it has financed the renovation of a school in Halidzor. The Wings of Tatev Project will not be restricted to the cableway only. It is envisaged to create hotels, leisure and recreation zones. It is also planned to renovate the University of Tatev and the Monastery of Tatev. Now we are trying to choose between a single zone of modern hotels and creation of guesthouses in the villages of the gorge. We still have to do much, however, I am convinced that this successful program will be completed and will serve Syunik’s development. Nearly 10 thsd tourists used to visit our region annually before the launch of the program, but the number of the travelers has increased to over 80 thsd since the cableway was launched. If we add the multiplier effect and the hotel business development, I think it will be hard to overestimate the significance of the project for our region and for the country in general. Therefore, we are going to contribute to its further development in every possible way.


How much have you already invested and how much are you planning to invest in this project?


I think Ruben Vardanyan will give a more detailed answer to your question. As far as we know, over 16mln AMD was spent in 2013 to improve the areas near Tatev Monastery. Some 584mln AMD will be spent to develop the ropeway and the village of Galidzor, 206.5mln AMD to restore Tatev Monastery, 212mln AMD to develop local rural communities. In 2014 the project will receive over 1bln AMD.


How are things with gold production?


In Lichk we have a gold-mining plant, but it is idle. However, on the border with Vayots Dzor region, at Amulsar, Geoteam is planning a new large-scale program. Now they prospecting the area and are holding discussions with environmentalists. Geoteam is planning to process as much as 10mln tons of gold-bearing ore, which is quite a serious figure. This will require no less serious investments – more than $100mln. But our communities are actively supporting this project by providing it with lands.


Is agriculture also a priority in your plans? 


Of course, it is. We have certain achievements in this sector, especially in food processing. In view of Iran’s high demand for meat, we have built a modern German-technology-based slaughterhouse in Syunik community. In the soviet times we had over 700,000 sheep, today, we have just 105,000. This is a big problem, especially as we have large pastures near Sisian and Goris. We are also building a pig-breeding farm near Kapan. It is also based on German technologies and is supposed to give products of absolutely new quality. The farm will be launched in some three months. We have invested $3.2mln in this project. The farm will have some 4,000 pigs and will produce almost 300 tons of pork. We are investing more and more money in agriculture. As a result, we already cultivate almost 35,000 of existing 44,000 h of arable lands. We also have long-term programs to build irrigation systems and to buy agricultural equipment.


Could you specify you plans in figures?


In 2013 we invested in the region over 38bln AMD, of which over 23bln AMD was invested in ore mining. Today we are taking certain steps to invest more in SMEs, agriculture, tourism. So, in 2014 ore mining will receive just 10bln AMD of total 33bln AMD. The rest will be spent on education, health care, social security, urban development, road building, gas supply, agriculture, environment protection, tourism and, most importantly, SMEs. Each new SME will give us 50-100 new jobs. So, this is our priority. I believe that an investment should be aimed at creating jobs, otherwise, it is just waste of money.

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