The Kapan Region of Armenia

by Armen Vahradian

The Kapan region of southeastern Armenia contains some of the country's richest
mineral resources, including copper, molybdenum, gold, and marble.  It offers
important opportunities for U.S. companies in the mining and metallurgical
industries.  The region is home to 150 large and medium-sized manufacturing and
service companies.  In addition to mining and metallurgy, major Kapan enterprises
include several defense-related electronics plants, a shoe factory, a meat cannery,
a textile factory, a furniture plant, and seven construction firms.  Several of the
region's most important enterprises are slated for privatization in 1996.  The city of
Kapan (pop. 57,000), which straddles the Vohkchi River, is Armenia's fourth
largest industrial center and the region's administrative center. 

Mineral Resources
Kapan is an important producer of copper and molybdenum, and has 450
significant deposits of copper ore.  Kapan copper and molybdenum smelters shut
down following the demise of the USSR, but two large copper mining and
processing facilities in the city of Kapan reopened in early 1994, generating
revenue which now covers 95 percent of the region's annual budget.  The facilities
only produce copper concentrate, however, losing potential profits from the
production of ready-copper. 

Kapan possesses three operational French-built hydro-electric power plants.  Plans
have also been drawn up for construction of a pipeline, crossing Kapan, to bring
natural gas from Iran to Armenia.  When completed it will provide additional energy
resources for industrial development.  

Kapan needs to upgrade its transportation infrastructure.  The  region is remote,
road conditions are difficult, and the continuing embargo of routes by Azerbaijan
and Turkey effects the region as well.  International cargoes must be shipped via
Yerevan and Georgia's Black Sea ports.  A key highway traverses rugged mountain
passes and is subject to frequent ice and snow in the winter.  Plans call for
improving the existing road network and for constructon of new new roads linking
Kapan with the rest of the country. 

Potential Investment Opportunities
The Zangezur Copper-Molybdenum Integrated Works (ZCMIV) is an example of the
many Kapan firms seeking foreign investment.  A major supplier of industrial raw
copper for the Soviet economy, ZCMIV currently exports 90 percent of its copper
concentrate, with annual sales of $50 million.  ZCMIV is looking for equity
investment, capital equipment, and management assistance in building a
metallurgical complex for processing molybdenum-rhenium concentrates, with final
products - foil, wire, and powder - for domestic sale and export.  For more
information on the Kapan region, contact A. Sargisyan, Head, Department of Social
Economic Development,  Kapan City Council, 374-2 62-417 or H. Hovhannisyan,
President, Armenian Chamber of Commerce and Industry in Yerevan, 374-2
56-54-38.

Armen Vahradian represents BISNIS in Yerevan.

**Produced by the Business Information Service for the Newly
Independent States (BISNIS)