Subsoil Security: The State of Mining and Armenia’s Mineral Wealth

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The ground shook beneath Ruzanna Tsatryan’s home as a muffled mine explosion in the distance sent the glassware rattling in the cupboards.

“They’ve shelled us from planes and helicopters,” she says unflinchingly, recounting her life living on the frontlines in Artsakh during Azerbaijan’s 2023 ethnic cleansing (and the brutal wars that preceded it for three and a half decades). “We’ve seen everything. Nothing can surprise us.”

Tsatryan now lives near and works at the Agarak Copper and Molybdenum Combine, where she oversees molybdenum drying. The mine, located near Meghri, is one of the largest employers in Syunik and is owned by Russia’s GeoProMining. The copper and molybdenum extracted here have become strategic assets in a broader geopolitical contest over economic development, national security and Armenia’s shifting orientation toward global markets.

“Copper prices are rising,” says Artyom Geghamyan, Executive Chair and co-founder of the International Chamber of Mines of Armenia (ICMA). In 2021 and 2024, the price of copper reached over $9,000 per metric ton. “If you look at the forecasts by the International Energy Agency (IEA), by [2035] we are going to face [a significant] copper shortage in the world. Armenia can be a major contributor in the wake of this global demand.”

For decades, Armenia’s mining sector operated in the background of the post-Soviet country’s politics. Its mineral wealth is mostly controlled by Russian companies. But as the world races toward clean energy and Armenia distances itself from Moscow, this subsoil industry has become a cornerstone of the nation’s aspirations for economic sovereignty and national security. Armenia now faces the challenge of attracting Western investment amid a geopolitical tug-of-war involving Russia’s iron grip and China’s growing role as a major buyer of Armenian minerals.

The critical minerals buried in Armenia’s mountains are increasingly tied to the country’s security. These resources could provide a meaningful boost to the economy, but their strategic value also lies in reducing overreliance on a single partner. Moving toward more diversified investment, particularly with Western actors, offers Armenia some room to maneuver in an environment where dependence on Russia has long created vulnerabilities. In this light, mining reform is not only about economic growth, but also about building resilience. Aligning the sector with international markets and environmental, social and governance (ESG) standards could help Armenia strengthen its economic foundations and broaden its partnerships. The way the country manages its mineral wealth may shape whether it remains constrained by old dependencies or gains greater flexibility in navigating future geopolitical pressures.

Mining has contributed between approximately 4 to 6% of Armenia’s GDP and accounts for nearly a third of the country’s industrial production. Traditionally Armenia’s key minerals include copper, molybdenum, gold, silver, zinc and antimony. According to the German Economic Team, exports of copper, molybdenum and gold increased from $700 million in 2018 to over $1.2 billion in 2022.

Armenia’s mining sector has deep roots, dating back to the opening of the Alaverdi mine in the 1770s and the Kapan gold mine in the 1840s. However, resource extraction in the 20th century Soviet era was centrally planned and operated under Moscow’s tight control. Copper, molybdenum and other key minerals were shipped across the USSR.

After the Soviet Union collapsed in 1991, Armenia plunged into an economic crisis and a brutal war with Azerbaijan. Amid the chaos of a post-Soviet transition, many of the country’s most valuable mines were hastily privatized, often for pennies on the dollar, and eventually came under the influence of Russian business interests. Today, much of the country’s extractive sector remains dominated by companies like GeoProMining, whose ownership and operations still trace back to Russian networks.

In 2018, Armenia’s Velvet Revolution ushered in a new reform-minded government that promised transparency and a break from oligarchic rule. The revolution sparked growing pressure on extractive industries to ensure that profits benefit Armenian interests first.

Now, in the wake of Armenia’s increasing pivot away from Moscow, the mining sector has taken on new geopolitical meaning. With rising metal prices and shifting defense technology needs, rare earth elements and metalloids, such as antimony, that are being mined in Armenia are becoming critical. The United States defense industry, for example, is heavily reliant on antimony. Copper is in high demand globally for its high electrical conductivity and durability at an affordable price. But copper faces significant supply risks and price increases.

“Based on the pipeline of existing and announced copper mining projects, there is set to be a 30% supply deficit by 2035,” says Shobhan Dhir, IEA critical minerals analyst. “This copper supply gap is driven by declining copper ore grades (the average grade of copper mines has decreased 40% since 1991), which has led to increased capital costs and complexity for expansions and new projects, deterring investment.”

The Armenian critical minerals, such as antimony and copper, once extracted quietly under Russian oversight are now being reimagined as strategic assets that can help respond to new demands and growing supply gaps—using Western investment in exchange for these critical minerals as potential tools of economic independence from Russia.

“Copper is the primary metal commodity produced in Armenia, with an average annual growth rate of 11%,” says a spokesperson for the Extractive Industries Transparency Initiative (EITI) international secretariat. “With global demand for copper and other critical energy transition minerals on the rise, stronger governance of these minerals can translate into a competitive advantage.”

Geopolitical Tensions Beneath the Surface

According to the U.S. State Department, “Obstacles [to the investment climate] include Armenia’s small market size, relative geographic isolation due to closed borders with Turkey and Azerbaijan, weaknesses in the rule of law and a legacy of corruption.” Investment from the U.S. and other Western companies are now limited—something that Geghamyan hopes to change.

“We don’t have any American investment in the Armenian mining sector,” he notes. “However, we do have U.S. investment in Armenia’s energy sector, which is probably the only major U.S. investment in energy or mining product related sectors right now. So I think we have momentum to address this gap.”

Russia’s traditional influence in the region is waning, partly due to geopolitical shifts and international sanctions. China, meanwhile, has become Armenia’s dominant mineral buyer, becoming the top buyer of copper ore.

As for Western foreign investments, according to Geghamyan, Canada and Australia have emerged as key players in junior mining exploration projects, especially in “greenfield” zones (areas where mining has not yet begun, but geological surveys indicate promising potential). Armenia seeks to pivot westward, attracting investment aligned with Western ESG standards. Geghamyan emphasizes the need for “new geological standards and transparency” to lure foreign investors and diversify partnerships.

Despite reforms to attract new Western foreign investment, challenges remain. Environmental enforcement is inconsistent and legal troubles, such as ownership through shell companies, continue to complicate governance regulations. Armenia’s geopolitical position, sandwiched between powerful neighbors with competing interests, projects uncertainty and instability that can deter investment.

The Armenian government’s recent membership in the Extractive Industries Transparency Initiative (EITI), a voluntary initiative bringing together governments, companies and civil society organizations to promote the open and accountable management of oil, gas and mineral resources, marks a strategic step toward international best practices. EITI’s requirement that companies disclose beneficial ownership aims to reduce corruption and enhance credibility. According to the EITI, transparency helps to derisk investment by ensuring that there is a level playing field for business to operate.

“Armenia has taken steps to enhance transparency in three important areas,” says a spokesperson for the EITI international secretariat. “It has started to publish information on the beneficial owners of companies, it has improved how revenues from the sector are managed locally, and it has made the terms of mining contracts public. These are important signals to investors and to sector stakeholders and represent concrete steps to improving accountability and closing channels for corruption.”

In June 2025, Armenia was also among the first EITI member countries to launch a public, nationwide register of beneficial owners. The database covers more than 120,000 companies across every sector, including mining, and is meant to strengthen investor trust by lowering the risk of corruption and making it easier for businesses to vet potential partners.

“Armenia’s model has been recognized as a valuable example for other countries seeking to attract responsible investment while increasing accountability in the extractive sector,” says a spokesperson for the EITI international secretariat.

The nation’s vast underground wealth could propel economic independence and strengthen national security, especially as the global demand for critical minerals steadily increases. But without sustained reforms, transparent governance and strategic foreign investment, the riches beneath Syunik’s mountains risk not being leveraged as national security assets.

How Armenia manages this wealth will influence its capacity to strengthen sovereignty, reduce economic vulnerabilities and diversify partnerships. Effective governance of the mining sector could help the country balance competing pressures, avoid overdependence on any single actor, and chart a more resilient course through larger geopolitical struggles.

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