Secret ZCMC deal damaged Armenia's reputation, expert warns

The secret sale of a 60% stake in the Zangezur Copper Molybdenum Combine (ZCMC) to Industrial Company and the immediate donation of 15% of the shares to the Armenian government have already harmed Armenia’s international standing and investment climate, according to international law expert Aram Orbelyan.

Speaking on a TV program on Wednesday, Orbelyan, managing partner at Concern Dialog Law Firm, said the developments surrounding Armenia’s largest mining enterprise represent not only a serious financial risk, but also a blow to the country’s global credibility.

“A few months ago, a foreign investor told my colleague he was concerned the government might want to acquire 20% of his company. When the state takes 15% and claims it will boost investor confidence, that is simply unlawful,” Orbelyan said. “State ownership in a private company means the government will solve issues through non-legal mechanisms, which distorts competition and directly harms the investment environment."

Orbelyan also criticized Prime Minister Nikol Pashinyan’s remarks suggesting that Armenians’ understanding of subsoil resources belonging to the people and the state is “flawed” and should be revised. He called that statement “manipulative,” stressing that mining companies already pay specific taxes for using state-owned mineral resources.

“Beyond ordinary taxation, these companies pay a special levy for exploiting natural resources. The state already benefits financially through these taxes. Owning a direct stake only undermines its regulatory role,” he argued.

According to Orbelyan, state participation in commercial enterprises also raises major governance concerns, including corruption risks, opaque procurement practices and politically motivated appointments.

“This is evident in the case of the Electric Networks of Armenia (ENA),” he said. “Party-affiliated figures are being appointed to key positions. Even if nationalization is presented as serving the people, in practice, management is given not to the most qualified experts, but to those loyal to the ruling party.”

The controversy over ZCMC has drawn international attention. The company’s shareholder, Walnort Finance Ltd, has filed a complaint with the International Centre for Settlement of Investment Disputes (ICSID), accusing the Armenian government of unlawful interference in the company’s internal affairs.