Armenia’s subsoil is rich with ore natural resources. Non-ferrous and ferrous metal ores, rock salt, bentonite clay, perlite, fire clay, diatomite, travertine, pumice stone, tufa, tufflava, basalt, granite, andesite, andesite-basalt, marble, marble limestone, etc, are the minerals having industrial importance. Armenia also has deposits of semiprecious stones (agate, amethyst, turquoise, jasper, obsidian). Armenia has no proven oil or gas deposits but some companies have recently made efforts to prospect for such deposits.
Deposits are located in the central, northern and south-eastern regions of the country – ie the Abovyan (Kaputan) deposit, the Hrazdan deposit, the Svarants deposit, and the Akhtal deposit in the north.
Copper and Molybdenum
Armenia is rich with copper and molybdenum ore. It owns 5.1% of overall and 7.6% of proven world reserves of molybdenum. The copper ore mined in Kapan, Kajaran, Agarak and Akhtala is processed at the copper-smelting metallurgy plant in Alaverdi or exported as concentrate. Armenia’s non-ferrous metallurgy sector is also engaged in the production of aluminium and molybdenum.
Gold and Non-ferrous Metals
The biggest gold deposit in Armenia is the Sotk gold mine (currently being exploited), whose gold reserves totals at least 100 tons. Among others, the Amulsar gold mine and the Shahumyan gold polymetallic mines are the most famous.
Aluminium and Barite
Armenia possesses large reserves of nepheline syenite and barite with gold and silver admixture, lead, zinc, manganese, gold, platinum, antimony, mercury and arsenic deposits.
Armenia has deposits of cuttable diamonds in the territory of the Khosrov Woods.
The most common semiprecious stones in Armenia are agate, jasper, amethyst, beryl, obsidian, onyx, turquoise and andesite.
The following natural stones are widespread on the territory of Armenia: volcanic, petrosilex and limestone tufa, granitoid rock and carbonates, basalt, shell rock and marble.
Armenia is a civil law jurisdiction.
The legal system of Armenia is mainly based on the continental (civil law) system. However, recent changes in the legislation have resulted in the import of common law elements into the Armenian legal system. In particular, the Judicial Code of Armenia has introduced the institution of judicial precedent into the legal system. Starting from 2007 the decisions (ratio decidendi) of the Cassation Court of Armenia have become binding on the lower courts. In 2018 the Judicial Code was amended, its current edition does not directly stipulate that decisions of the Cassation Court of Armenia are binding on the lower courts, but it still provides that if legal interpretation in the case differs from the Cassation Court’s interpretation for similar cases, the court shall provide a justification for not considering the Cassation Court’s interpretation. The Civil Code of Armenia was enacted in 1998. Its draft was based on the Commonwealth of Independent States (CIS) Model Civil Code, which in its turn was mainly based on the German Civil Code (BGB) and the Civil Code of the Netherlands (DCL). Similar to those, it is comprised of the general provisions (eg, provisions on persons, general property and obligations regime etc) and special provisions (eg, various types of contracts, etc).
The hierarchical construction of sources of Armenian law is fixed by the Constitution and the Law on Normative Legal Acts and is outlined in descending order of importance below:
The main direct sources of Armenian minerals related legislation are:
The two key pieces of legislation regulating the mining industry used to be the Code on Subsoil, adopted on 25 February 1992, and the Law on Concessions for Subsoil Assets For the Purposes of Exploration and Mining of Minerals, adopted on 5 November 2002. Both were subsequently replaced in 2011 (effective from 1 January 2012) by a unified document regulating mining issues, the Code on Subsoil (the Code). Since their adoption, these and numerous other relevant legal acts regulating mining operations have been adopted. There are often inconsistencies among the various legal acts, or conflicting regulations or a lack of detail, common sense or clarity within them.
The Republic of Armenia is the exclusive owner of mineral deposits. Access to the deposits can be granted, under a permit to mine, for exploitation but they may not be privatised. The inner tracts of subsoil may not be bought, sold, pledged or otherwise alienated. The deposits become the property of the mining company once they are extracted from the subsoil.
In Armenia the state is the owner, grantor and regulator. There is no mandatory national or government joint venture, contracting or participation. The contract the state is entering into with a mine owner is of a regulatory nature.
The state grants mining concessions (called under the current applicable law “mineral rights”, or (literally translated) “rights to exploit subsoil”) based on applications on a “first come first served” basis or through auctions (in the case of radioactive materials). The “mineral right” is granted pursuant to a set of documents evidencing that right (permit, contract, land mass allocation act). Entities that discover deposits under exploration permits have priority to get exploitation permits for those deposits.
The Constitution provides that the subsoil and water resources are under the exclusive ownership of the state. Exploitation mining rights derive from statutory provisions. As to the nature of those rights – the issue is not clear. On the one hand, it is property and can be bought, sold and pledged, on the other, any buyer needs to undergo the same authorisation procedures as the original holder of the rights. Thus, mineral rights are of a mixed nature, they possess both proprietary and permit/authorisation features. The contract is a source of mineral rights in a sense that the state enters into a contract with the mineral rights holder as a part of the authorisation process. But this contract is not the primary source of licence-granting but a part of the authorisation process, and packaged so that, in essence, it could be formulated as a licence rather than a contract.
The authority granting mineral rights is a national authority – the MITG (formerly the Ministry of Energy Facilities and Natural Resources). Mineral rights are granted by the provision of a subsoil use permit followed by a contract (which is however of a largely regulatory nature containing “licence terms”, as described in 1.5 Nature of Mineral Rights). The process of granting mining rights is finalised by issuing a land mass allocation act, which defines the ultimate territorial boundaries of mining activities under the mining permit. Other documents constituting and evidencing mineral rights are the mining/exploration project environmental impact assessment (EIA) and the technical safety clearances.
The mineral right (title) is indivisible and might belong only to one legal person (including a foreign commercial organisation). Free and indefinite use of the subsoil may be performed for non-profit seeking purposes through the mining of non-metallic minerals for personal needs, on land belonging to the subsoil user. The subsoil user has the exclusive right to conduct activities within the boundaries of the allocated mine. The subsoil user has the right to carry out activities relating to the use of subsoil only within the boundaries of the allocated mine. The entity possessing mining rights has the right to conduct geological exploration within the boundaries of the mine defined by the Mine Allocation Act having notified, to that effect, the relevant state authority.
Local government has indirect influence over the exercise of mineral rights through the holding of land and surface rights as well as through its ability to influence EIA opinions.
Excluding the indefinite and free use of the subsoil for the mining of non-metallic minerals for non-profit seeking purpose for personal needs, on land belonging to the subsoil user as discussed in 1.6 Granting of Mineral Rights; the subsoil right is granted for a limited time periods.
For geological exploration of subsoil – for no more than three years, which may be extended pursuant the procedure specified in the Code for three consecutive periods of two years.
For mineral mining purposes – for the full period of the exploitation of the mine in accordance with the project, which satisfy the procedures prescribed under the law, but for no more than for 50 years.
The main security of tenure is attributable to the facts that:
Below is the regime for terminating mining rights which, it should be noted, is very investor friendly, especially in providing enough time to remedy breaches that could otherwise result in termination of tenure.
Mineral right shall be terminated if:
In all the above-mentioned cases the relevant authority has the right to unilaterally terminate the subsoil use contract. The subsoil use may also be terminated for the public interest and in accordance with the provisions of Armenian legislation.
The right to use subsoil may be conferred on the condition of protection of nature and the environment, human health and safety. Use and protection of natural resources, as well as issues related to nature protection and ecology during mining and prospecting activities, fall within the scope of the of authorities of the Ministry of Nature Protection and the Cabinet of Ministers of the Republic of Armenia ( the government).
The main environmental matters regulated under Armenia law can be classified as follows:
A special authority, the Environmental and Natural Resources Inspectorate, is responsible for enforcement and reports directly to the Cabinet of Ministers.
The EIA and its clearance is the main environmental check prior to starting a project and any changes thereof. Mining objects (the mine site itself, producing and processing facilities such as plants and tailing dams, heap leach facilities, etc) are also subject to EIA clearance.
The Ministry of Nature Protection (MNP) is in charge of providing environmental sign off with respect to mining projects and facilities.
EIA clearance is conducted in 4 stages set out below.
Stage I (Preliminary Assessment)
To organise a public hearing on its intended activity, the mining company (initiator) applies to the head of the affected community. The public hearing is held with the support of the head of the affected community not earlier than the seventh working day after the application to the head of the affected community. The public hearing is held in the affected community. At this stage, the community can submit written comments and proposals, these need to be submitted within 15 working days after the notification on the public hearing.
The protocols and an audio-visual recording of the public hearing, as well as the summary sheet compiled by the initiator along with explanations of the acceptance or non-acceptance of the received suggestions and comments, are attached to the preliminary assessment application. The substantiated answers to the comments of the community are included in the preliminary assessment application and are submitted to the MNP for preliminary expert scrutiny.
Stage II (Preliminary Scrutiny)
This stage begins the moment the initiator submits the preliminary assessment application to the MNP. The preliminary assessment application is first submitted to the MITG, which sends the application to the MNP.
As a result of expert scrutiny of the preliminary assessment application the Expertise Centre adopts a draft decision on the intended activity, subject to impact assessment, and ,through its official website, provides the venue, date and time of the public hearing, at least seven working days prior to the hearing. The venue, date and time of the hearing is determined by the Expertise Centre in conjunction with the initiator.
At least seven working days after notification, the Expertise Centre implements a public hearing on the draft decision adopted as a result of preliminary expert scrutiny with the support of the initiator and the head of the affected community. At this stage, the community can submit written comments and proposals within seven working days after the notification.
The comments and proposals received during the public hearing are taken into account in the decisions adopted by MNP and in the terms of reference provided to the initiator. Reasonable grounds should be given if the comments and proposals are not taken into account.
The maximum duration of this stage is 30 working days, starting from the moment the MNP receives the preliminary assessment application.
Stage III (EIA Assessment)
This stage begins the moment MNP provides the initiator with the terms of reference. The initiator, in accordance with the terms of reference provided by the MNP, drafts the environmental impact assessment of the intended activity.
Within this stage, another public hearing should be held, for the purpose of which the initiator once again applies to the head of the affected community. The initiator implements the public hearing with the support of the head of the affected community at least seven working days after notifying the head of the community. The venue, date and time of the hearing is determined by the Expertise Centre in conjunction with the initiator. At this stage, once again, the community can submit written comments and proposals within 15 working days after the notification.
During the public hearing the initiator should provide due and complete information on the intended activity and should answer all the questions raised by the community. The protocols and an audio-visual recording of the hearing, and the substantiated answers to the comments of the community, are included in the environmental impact assessment report.
Stage IV (Expert Scrutiny of the Assessment)
This stage begins the moment the Initiator submits the assessment report, compiled in accordance with the terms of reference, to the MNP. The Expertise Centre places the electronic version of the report on its official website not earlier than the 20th day after the receipt of opinions on the report and, within same term, sends the report to the head of the affected community for organising a public hearing. At least seven working days after notification, the Expertise Centre implements a public hearing with the support of the initiator and the head of the affected community. The venue, date and time of the hearing is determined by the Expertise Centre, in conjunction with the initiator.
During the public hearing the specialists of the Expertise Centre should provide due and complete information on the intended activity, on its environmental impact assessment, and should answer all the questions raised by the community. The head of the affected community and the Expertise Centre accept written comments and proposals by the community. At this stage, the community can submit written comments and proposals within 15 working days after the notification.
The maximum duration of this stage is 60 working days starting from the moment the MNP receives the assessment report. Then MNP provides the final expert opinion. If that opinion is positive the project, and the building and exploitation of the facility, can begin.
Another preliminary environment-related requirement is to obtain and maintain a valid water permit for mining operations which provides the authorisation regime for water use and discharge and project-specific maximum allowable concentrations. Discharge levels must conform to the requirements of Government Resolution N75 on “Defining the provision of the river basin management of water quality norms, depending on the characteristics of the specific area”.
Other mandatory requirements regarding environmental protection concern mine closure. Among other documents required to be attached to the application seeking the grant of mineral rights, the Mining Code mentions a “mine closure plan” and sets forth the relevant content of that plan as follows:
As to ongoing environmental compliance requirements, those can be summarised as follows. The mineral rights holder shall:
Of the above, the bulk of environmental obligations concern waste management. Starting from 2021 mining permit holders shall implement measures provided in the waste management and processing plans even after closure of the mine to deter or minimise the potential adverse effects on the environment and health of the people. This provision effectively means that mine operators remain liable for management of waste after the Mining Authority accepts the fact that the mine closure plan has been implemented.
Permit holders must also address, in their waste management plans, the issue of recultivation of the waste management site as a mandatory content requirement for that plan.
They must use methods of waste management that:
There are several special protected areas in Armenia with different protection level statuses. Among those most protected are reserves and parks where mining activity is directly prohibited in full (reserves), or is very limited where blasting, and any processing of whatsoever is prohibited (reservations). Regimes for protected areas, such as nature monuments and limited access zones, are more generally described but, in most cases, mining will be impossible there as well.
Communities affect mining in two ways. Firstly, getting their consent and support has become more and more important for overall positive sign off of the project. To get EIA cleared, an entity seeking to obtain mineral rights shall hold multiple public hearings (see 2.1 Environmental Protection and Licensing) and having negative feedback is not good for approval of the project. While formerly such hearings and dealing with the community were largely a formality, in recent years engaging with the local community and securing its actual consent has become critical for the success of a mining project.
Secondly, communities (municipal authorities) possess primary proprietary rights over the majority of mining areas and therefore are in control of those rights, to the extent they can refuse to grant rights in land effectively rendering the licence useless. In Armenia, mineral right and title does not automatically (or as a matter of the authorisation process) result in securing surface rights over the granted area. At the same time, mining, without securing surface rights, is prohibited. Most of the communities are poor and will be apt to grant leases to secure cash in local budgets, however, against the current background of rising environmental awareness, leasing the land for mining purposes may become more problematic.
Prior and informed consultation is a mandatory process as a part of EIA clearance of the mining/exploration project and is carried out by the investor, community and the state together; each having certain role in the process. EIA clearance of mining projects is in fact a four-stages process, of which each stage includes a public hearing, as described above in 2.1 Environmental Protection and Licensing. Formerly, such hearings were considered to be formalities but in recent year the process has become more substantive given the rise of environmental awareness and the general trend of communities enforcing their rights in the process.
There are no specially protected communities in Armenia.
Separate community development agreements are regulated or practised by the mining industry. At the same time, certain community development obligations (mainly financial) are inserted into subsoil use contracts (which form a part of a mining authorisation, as indicated in 1.6 Granting of Mineral Rights) with the state. Based on such obligations, a mining company may enter into an agreement with the relevant community defining cash allocation targets, mechanisms and accountability. Such agreements may be entered into also irrespective of the mining company obligations under the licence, just to secure favourable standing with the community and/or the municipal authorities.
It is hard to assess and present bad or good examples. The process is usually controversial with mine-opening supporters claiming consultation has been duly conducted and good relations established while opponents claim failure to observe due process. Good and bad examples also depend on whether the area is a traditional mining site or not. Traditional mining sites show a better record of community relations as those communities have been living in mining areas for centuries. Old metallic mines in Armenia show records of mining activities from ancient times and therefore communities are mainly friendly to the industry (Kapan region, Alaverdi region, Sotk region) while new mines, despite sometimes having more modern and community-friendly approaches, face problems.
There is no direct link between climate change concerns and the Armenian mining industry. However, in the context of rising environmental awareness, mining industry environmental concerns are highlighted. These are mainly related to direct water recourse, and soil and air pollution, with processing facilities (plants, waste tailing dams and communications) being of special environmental attention.
Armenia has not passed specific laws regarding climate change related to the mining industry, though Armenia is a participant to climate change international initiatives and treaties and implements policy directed at the prevention of climate change.
The World Bank Mine closure programme may be cited as a recent initiative in the field. Otherwise, we are not aware of any other sustainable development initiatives concerning or related to the mining industry.
Armenian laws generally do not make a distinction between taxing national and foreign investors. However, foreign investors (at least theoretically) can benefit from grandfathering clauses of the Law on Foreign Investors which states that a foreign investor can rely on legislation in force for three years after the investment was made. Practical implementation of this clause, however, has never been tested.
On the other hand, the above-stated (that foreign investment and local investment are taxed equally) is only applicable to the taxing of a resident entity. When taxing a non-resident entity, Armenian law may provide for different regimes of taxation as compared to residents and several Double Taxation Avoidance Treaties may apply with different results.
Below is general description of the tax system, the main taxes and the regime applicable to mining companies.
The Armenian system of taxation is currently based on the Tax Code in force since January 2018. The Code envisages both traditional forms of taxation like corporate profit tax, individual income tax, VAT, property tax and excise tax as well as introducing new forms of taxation such as an ecological tax, an ecological exploration payment tax on roads, a real property tax and vehicle tax.
Profit tax (more commonly known as corporate income tax) is to be paid both by residents (ie, organisations registered in Armenia), and non-residents (ie, international organisations and other organisations established abroad). Residents are taxed on the profit gained in the territory of Armenia and outside; while non-residents are taxed solely on profit gained in Armenia. The annual profit tax rate applicable to residents, as well as to the subdivisions of non-residents registered in Armenia, is 20%. The profit tax is calculated on the basis of the taxable profit, which corresponds to gross income, deducting the amounts specified by the law (expenses required for conducting activities and justified by corresponding documents, depreciation allowances, etc).
For the incomes payable to non-residents, except for the non-residents operating in Armenia through a subdivision, the general rate of profit tax is 10%, and the amount of the profit tax shall be withheld at the source at that rate and paid to the State budget by a tax agent (a legal entity, a foreign legal entity's subdivision, an individual entrepreneur registered in Armenia, etc) that deals with the non-resident. At the same time this general tax rate may be non-applicable if this is stipulated in a Tax Treaty between Armenia and the respective jurisdiction. Dividends are separately subject to taxation (5% from 1 January 2020).
Value added tax
Value added tax (VAT) is a type of indirect tax, which is imposed on certain transactions and operations – ie, the supply of goods, the provision of services (including lease of property and transfer of intangibles) and the import of goods under "release for domestic consumption" customs procedure.
Beginning on 1 January 2018, a new natural person income tax has been introduced, replacing and unifying previous income tax and compulsory social security payments.
In Armenia, both resident and non-resident physical persons, including citizens of Armenia and foreign citizens, are obliged to pay income tax. An individual shall be considered a resident if during any twelve-month period starting or ending in a tax year (from January 1st to December 31st inclusive) he or she has been residing in Armenia for a total duration of 183 days or more, or whose centre of vital interests is in Armenia. For a resident, the taxable income received within or outside the territory of Armenia is considered to be the object of taxation. For a non-resident the taxable income received only from Armenian sources is considered to be the object of taxation.
As a general rule, when incomes are payable to physical persons by a tax agent, the latter shall be obliged to calculate and withhold the amount of the income, except for cases when the respective income is payable to a physical person registered as an individual entrepreneur in Armenia or to a notary public. Different income tax rates are imposed by the law depending on the type of income payable, status of the taxpayer within the framework of the activities aimed at gaining respective income, as well as his or her citizenship.
Property tax is a direct tax on property considered as a taxable object and does not depend on the outcomes of the taxpayers' economic activity.
The property tax shall be paid by organisations set up in Armenia or in other countries, international organisations and those created by them outside Armenia, citizens of Armenia, foreign citizens, as well as those without citizenship who have ownership right to a property in Armenia. It should be noted that the absence of formal registration of ownership right to buildings under construction or to unauthorised buildings/constructions may not serve as a basis for exemption from property tax.
Buildings, constructions of residential use (apartments, villas, etc), of public or production use, including unfinished buildings and buildings under construction, garages and motor vehicles (including motor cars, watercrafts, snowmobiles, four-wheelers and motorcycles) are considered as taxable objects.
The new system of social payments has been in place since 1 July 2014. The social payments are to be transferred to the state budget as targeted payments which will be directly dependent on the size of the pension to be received by a person in the future. The new system is applicable for persons born after 1 January 1974. The employer is responsible for payments to the state and shall withhold and pay pension contributions to the pension scheme. The rate at this point is 2.5% of the gross salary.
Mining Special Taxes and Duties
Royalties in Armenia are revenue-based and are calculated as follows:
The accounting period for the royalty is a calendar year.
The calculated royalty is payable to the state budget until April 20thof the year following the reporting one.
Reclamation and closure fund contributions
The funding is to be conducted in an upfront payment (to be paid within one month of signing of the mining agreement with the relevant authority) of not less than 15% of the Base payment and ongoing yearly minimum payments (to be paid until December 31st of the respective year) calculated according to the following formula:
That is: Yearly minimum payment = (Base – Upfront payment)/term payments in years (with the exclusion of last year)
Base is determined by the projected estimate of total monitoring costs submitted to the authority as a part of the mine closure plan. No regulation contains methodology or guidance on preparing such estimates.
The allocated funds are transferred and then registered in the non-budgetary treasury accounts of the authority and are administered by the latter.
Environmental (ecological) tax
This is payable for pollution, emissions and waste dumping in allowed quantities. Ecological taxes are paid for various kinds of pollution, with the rate being higher if pollution levels (quotas) are exceeded. The taxes are paid to the state budget. The funds are then used to finance the government’s environmental policy implementation.
These are for the monitoring (by the state) of factors adversely affecting the environment, and the health and safety of the affected communities.
Tax stabilisation agreements are not practised in Armenia. There are no special tax incentives for mining investors, although the overall tax regime applicable to mining is investor friendly.
Capital gain on the transfer of a resident business by a non-resident will qualify as taxable but the current applicable rate for non-residents is zero. Transfer of a non-Armenian entity though, will not qualify as an Armenian taxable event if the seller is non-resident. Residents will be taxed unless they are natural persons.
The main features that attract mining investment to Armenia are:
Relatively easy regime for acquiring and retaining mining rights,
The Code requires that the shareholder structure be demonstrated when applying for a licence and that’s it. The Code does not provide for any shareholder-qualifying criteria. Given, however, that mineral licence granting is quite a discretionary process, any shareholder structure with negative implications for national security may fail. Otherwise, there are no restrictions on foreign investment in the mining sector.
There are no special international treaties dedicated to mining issues specifically.
Various forms of debt and equity financing are available, including export prepayments, pre-export facilities, capex facilities, VAT facilities, bond issuance, project finance, streaming and royalties. There are no restrictions as to what the sources shall be though general anti-money laundering and terrorism financing (AMLTF) and sanctions-compliance restrictions will apply. Armenian mines have traditionally been mainly financed by syndicated or single bank loans, often involving large international syndication. Recent financing trends have attracted large interest and cases of stream financing as well as corporate local and Eurobond issues. Armenian laws are mostly friendly to all forms of financing. In particular, Armenian laws allow for a quite a wide range of forms of security over almost every type of asset, whether owned or to be owned in the future by the grantor of security. Armenian law does not contain corporate-benefit provisions for granting guarantees and securities to back third-party liabilities. It also does not contain limitations on the movement of capital and the repatriation of funds or payments into and out of Armenia, therefore providing an opportunity to select forms and structures for financing which are optimal from tax-regime point of view.
The regime for equity financing is less investor friendly due to corporate laws being underdeveloped or providing unnecessary restrictions (eg, certain types of debt to equity conversions), though the possibility of foreign corporate arrangement and the fact that the mining industry is fully open for foreign participation makes that issue less grave than it could be and does not play a major role in preventing equity financing in the sector.
A few investors in the Armenian mining sector are either listed or preparing to be listed in major international markets (eg, Toronto and London). The local market is very small and does not play any significant role in financing the mining sector, though some mining-sector related companies are listed. There are no specific requirements or forms for mining disclosures. At the same time, Armenian securities-market rules allow for listing by Armenian companies on major international markets directly, and offer these securities in Armenia for Armenian investors.
The security-granting regime under Armenian law if very investor friendly. Taking security over virtually any kind of asset related to mining is possible: mortgage over property rights in land; pledge/charge of mining rights; pledge of machinery and equipment, whether future or existing; pledge/charge of shares; floating charge; pledge of receivables under contract; pledge of cash in account; and other various types of guarantees (shareholder, bank guarantee, third-party guarantee). All these types of security may be granted by any type of entity, irrespective of whether that entity benefits from granting the security or not (ie, corporate-benefits requirements are not applicable). At the same time, on the downside, it should be noted that, for virtually every type of security, registration and enforcement procedures and formalities may be different; with different rates of liquidity of the relevant assets as matters of law and practice. While a pledge over real estate may, for example, be enforced quickly and effectively, enforcing a pledge over mineral rights may take a significant time to complete while enforcement of security over movables may result in practical difficulties (eg, inability to take effective possession).
As regards enforcement, in the absence of any agreement between the parties, a court proceeding and ruling will be necessary for the foreclosure, and the collateral must be sold by public auction. The law also provides for an option of extrajudicial enforcement without a court proceeding if there is an agreement to that effect between the parties. This agreement can again be part of the pledge agreement or it can be an auxiliary agreement between the parties. The pledge taken over properties of the borrower or a third person may start to be enforced as soon as the debtor defaults under the secured obligations. Although it is not explicitly mentioned in the law; in order to be secured, an obligation must be (i) of pecuniary nature; or (ii) if it is to be performed in kind, at least valuable in pecuniary terms.
The current state of the mining industry can be characterised as transition from a liberal, but uncertain and discretionary, regime to stable, but strictly supervised and enforced, regime. Since 2018, the Armenian government has revised its policy as to the place of the mining industry in Armenia with environmental matters starting to weigh heavy in the government’s priorities and becoming a significant political issue. That said, the Armenian government still regards the mining sector as a major driver of the economy and is committed to working with stakeholders for mutual benefit.