Government Aims to Save ‘Hrazdan Cement’, Parliament Suggests Not to Hinder Others

The price of imported clinker, a raw material for cement production, will slightly increase in the near future. This was announced today by the acting Minister of Economy Vahan Karobyan while presenting proposed amendments to the Law on State Duties in the National Assembly.

He reminded that the changes aim to stimulate local cement production and specifically to save one of the Armenian manufacturers from bankruptcy. “As a result of last year’s changes, ‘Hrazdan Cement’ has tripled its production volume, but its losses have also tripled. Their tax loss has reached 2.2 billion drams from 900 million drams. Essentially, it is on the brink of bankruptcy today. The proposal we have agreed to will not save the company,” said Karobyan, noting that alternative measures need to be found to rescue the company.

Babken Tunyan, a deputy from the “My Step” faction and chairman of the Economic Affairs Committee, also referred to the history of the discussed draft law regulating the import of cement and clinker. Tunyan recalled that in 2018, the price of cement in Iran dropped significantly, making it cheaper than domestically produced cement in Armenia. To protect local producers such as ‘Ararat Cement’ and ‘Hrazdan Cement’, the Government proposed to impose a state duty on imported cement and clinker.

It was planned to extend the state duty on imported cement and clinker for another six months during a special session of the National Assembly on December 28, 2020, but there were not enough votes. As a result, it became possible to import cement and clinker without duty from the beginning of this year.

“To protect local producers, the Government simply banned the import of cement and clinker. Later, the import of clinker was allowed, but cement imports are not permitted until July 1. We were told that the 14,000 drams you have approved is too little, but not accepting the clinker is a mistake that will lead to the ruin of local cement,” said the deputy, presenting statistics following the adoption of the law.

“Ararat Cement’s” production has increased from 443,000 tons to 534,000 tons, while “Hrazdan Cement's” production has grown from 30,000 tons to 90,000 tons. Cement imports have decreased from 208,000 tons to 152,000 tons. Cement production from clinker has been reduced from 118,000 tons to 91,000 tons.

This means that the result of our adopted law has led to an increase in the production volumes of two local companies, while imports and clinker-based production have decreased. The overall market has grown. When accounting for imports and production, about 800,000 tons has become 866,000 tons. Most interestingly, this has occurred during a downturn in construction,” emphasized Tunyan.