ZCMC Bond Participation



Project number:


Business sector:

Natural resources

Notice type:


Environmental category:


Approval date:

17 Sep 2019



PSD disclosed:

14 Nov 2019

Translated version of this PSD: Armenian

Project Description

Investing USD 11 million in senior unsecured bonds consisting of  (i) a USD 50 million bond (the "USD Bond") and (ii) a AMD 2.5 billion bond (USD 5 million equivalent) issued by Zangezur Copper Molybdenum Combine CJSC ("ZCMC" or the "company") and placed on the OTC market. Ameriabank acted as a Lead Arranger and Bookrunner and will be the Market Maker of the bonds on the Armenian Stock Exchange.

Project Objectives

The proceeds from the EBRD investment will finance investment projects aimed at improving energy efficiency and CO2 reduction. The investment is consistent with the Bank's Green Economy Transition approach. In addition, the transaction will contribute to the further development of the country's capital market.

Transition Impact

The transition impact of the project will stem from the following transition impact qualities:

Primary Quality: Resilient - supporting the largest corporate issuer with the only rated corporate bond of unprecedented public offering that will significantly contribute to the development of debt capital market, offering high quality credit risk and injecting additional liquidity in debt capital market.

Secondary Quality: Green - supporting energy efficiency and emission reduction innovative project that includes replacement of diesel trucks with light-rail haulage system powered by electrical motors, therefore leading to the reduction of GHG emissions.

Client Information


Zangezur Copper Molybdenum Combine CJSC is a leading Armenian mining company operating the largest copper and molybdenum mine in the South Caucasus region. ZCMC is majority owned by a German Group Cronimet, active in mining, metal recycling and trading.

EBRD Finance Summary

USD 11,000,000

Total Project Cost

USD 50,000,000

Environmental and Social Summary

Categorised B (2014 ESP).  Environmental and social (E&S) due diligence by the EBRD has confirmed that the use of bond proceeds will result in environmental and social benefits, notably a reduction in diesel truck use, and an associated reduction in CO2 emissions, during waste rock haulage through installation of an innovative rail system. Although not to be funded by the EBRD, the planned installation of a treatment system for decant water from the tailings management facility is further expected to result in environmental benefits. The Bank has agreed an ESAP through a framework agreement to target key improvements in E&S performance at ZCMC's operations. 

ZCMC is an old soviet-era mine that suffers from aging infrastructure and legacy issues. Since 2014 a new management team has been in place that has implemented various sustainability and technological improvements. Sustainability is now a key part of ZCMC's business and the necessary staff and budget are in place. Various improvements have already been made to bring operations in line with international good practice, specifically IFC's E&S standards, including: a move to formal E&S management system approach; improved health and safety practices; increased monitoring of environmental parameters; and the undertaking of various studies and assessments to understand the impact of the mine on the receiving environment including biodiversity and community health.  The Company has benchmarked its approach to E&S against IFC's standards and used this to inform a priority improvement programme. 

ZCMC is a significant employer in the area and plays an integral role in the community.  Community investments are significant and together with the Company's commitments to sustainability have been instrumental in maintaining the mine's social licence to operate. ZCMC regularly engages with local communities and discloses information about its activities.

ZCMC has previously received various fines and CSO opposition for environmental issues including discharges and spills and emissions to air. Many of these relate to historical activities and ZCMC is committed to addressing these aspects of its operations. Various corrective actions have been made already, include measures to reduce and monitor dust. Further it is noted that ZCMC is not the only mining company in the area, an area with a long history of mining activities. The rivers in the area do show the effects of mining but following a review of environmental monitoring data, ZCMC is not a significant source of pollution.  The decant water treatment project will further reduce the discharge of pollutants and achieve standards more stringent than the EU Bref (Best Available Techniques) limits for the sector.

A priority area of improvement for ZCMC has been health and safety (H&S), particularly changing the employee and management mind set to H&S matters.  Various successes in this regard were observed by the Bank but ZCMC acknowledges that substantially further improvements are required. These relate primarily to infrastructure improvements and form part of the ESAP.

A key risk considered as part of the due diligence is ZCMC's conventional tailings facility located 30+ km from the mine site.  The area does have a heightened risk of seismic activity, which presents a risk to the tailings facility.  It is noted, however, that it has been operating since the late 70s without issues. ZCMC intends to close the facility in the coming years and is considering a move to dry stack tailings closer to the mine site. This would reduce their risk exposure and enable ZCMC to significantly reduce their raw water uptake. The facility is subject to various integrity assessments and monitoring activities and is progressively revegetated.

The Bank has agreed a series of risk-based actions with ZCMC to improve overall E&S performance and to focus investment areas. These are in addition to the need for the use of Bank proceeds to be compliant with the EBRD's E&S Policy. ZCMC will be required to report to the Bank on an annual basis on E&S performance and ESAP implementation.

Technical Cooperation


Company Contact Information

Anna Sedrakyan

Business opportunities

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