This record is a partial extract of the original cable. The full text of the original cable is not available.

UNCLAS SECTION 01 OF 04 YEREVAN 002992 
 
SIPDIS 
 
COMMERCE FOR 3150/PBRADLEY/BSMITH 
COMMERCE FOR 4201/ITA/IEP/OEERIS/BISNIS/JMORGAN 
EMBASSIES - PLEASE PASS FCS 
DEPT FOR EUR/CACEN, EB/CBA 
ANKARA ALSO FOR CFC/ SNYDER/BALLINGER 
PASS TDA-STEIN, OPIC, EXIM-TUMMINIA/PANARO 
 
E.O. 12958: N/A 
TAGS: KTDB BBSR BEXP BTIO AM
SUBJECT: (IMI) ARMENIA:  REPORT ON KOTAYK PROVINCE 
 
INTERNATIONAL COPYRIGHT, U.S. AND FOREIGN COMMERCIAL 
SERVICE AND U.S. DEPARTMENT OF STATE, 2003.  ALL RIGHTS 
RESERVED OUTSIDE OF THE UNITED STATES. 
 
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SUMMARY 
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¶1.  On October 6-9, 2003, Embassy's BISNIS 
representative visited the Armenian province of Kotayk 
to explore investment and trade opportunities for U.S. 
companies and to expand U.S.-Armenian commercial ties. 
He met with the province's business leaders and 
government officials.  This is another in a series of 
regional trips to reach out to companies throughout the 
country to promote the BISNIS "Search for Partners" and 
"Trade and Tenders" programs and collect information on 
investment and commercial opportunities for U.S. 
companies.  End summary. 
 
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Kotayk:  General Background 
--------------------------- 
 
¶2.  Kotayk province is located in the central part of 
Armenia.  The province was formed in 1996 and includes 
three former administrative regions:  Hrazdan, Abovian 
and Nairi, with a total area of 797 sq. miles.  Based 
on the figures provided by Kotayk Mayor's office, 
Kotayk has 281,000 inhabitants, divided between 153,600 
urban residents and 127,400 rural residents.  The 
climate is mild continental.  Kotayk's mineral 
resources include a wide range of building materials, 
e.g., basalt, tufa, perlite and marble.  The province 
also has a large number of mineral water springs 
located near Arzni, Hankavan, and Bjni. 
 
¶3.  Due to its proximity to Yerevan, Kotayk is one of 
the most developed provinces of Armenia.  Its 
industrial sector includes 170 large, medium and small 
enterprises with total output reaching approximately 
USD 80 million in 2003.  Most companies in Kotayk are 
located in the province's three major cities:  Hrazdan 
(capital of Kotayk), Abovian and Charentsavan. 
 
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Key Sectors 
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¶4.  Key sectors represented in Kotayk include: 
 
--Energy 
The Hrazdan Thermal Power Plant (HTPP) and the Sevan- 
Hrazdan Hydropower Plant (SHHP) cascade have a combined 
installed capacity of 1,660 MW.  The assets of the HTTP 
were transferred to the Government of the Russian 
Federation against Armenia's debt to Russia.  The Sevan- 
Hrazdan Cascade valued at USD 25 million was 
transferred to Russia's RAO Unified Energy Systems as 
well for debts Armenia owed to Russia for fuel for 
Armenia's nuclear power station. 
 
--Diamond-cutting 
A number of successful diamond-cutting enterprises are 
located in the villages of Nor Hajn and Nor Geghi. 
Among them Shoghakn, Lori and Arevakn plants belong to 
foreign investors.  Aghavni and Andranik plants are 
operated and owned by local entrepreneurs.  Lori, owned 
by Haik Arslanian, a businessman of Armenian origin 
from Antwerp, Belgium, employs 400 highly qualified 
diamond cutters.  Equipped with modern western 
processing lines and using the latest technologies, the 
plant can fulfill even the most complicated orders. 
The company has an agreement with Arslanian Cutting 
Works in Belgium, by which the Belgian company supplies 
the uncut diamonds and the Armenian plant returns the 
processed diamonds for distribution in European and 
international markets.  Smaller amounts of Lori's 
products are distributed in the United States via the 
New York-based Cora Diamond Company, which also 
supplies Lori with uncut diamonds. 
 
Shoghakn diamond-cutting plant was established in the 
village of Nor Hajn in 1971 as a state-owned 
enterprise.  In July 2000 the plant was privatized by 
Lev Levayev, a prominent Russian businessman, who owns 
a worldwide network of diamond processing companies. 
Currently Shoghakn JSC employs 1200 specialist diamond 
cutters.  It exports processed diamonds primarily to 
Israel. 
 
Arevakn LLC, owned by the Belgian company Tashe, 
operates a newly-established diamond-cutting plant 
based in Nor Hajn. 
 
--Textiles 
The Charentsavan sewing factory, which works with 
Italian companies, exports its high-quality women's 
undergarments to Italy and to other EU countries. 
 
--Building materials 
"Mika-Cement" joint-stock company owns and operates 
Hrazdan Cement Plant, one of the largest producers of 
cement in Caucasus region.  "Mika-Cement" is affiliated 
with Mika Limited, a large importer of oil products as 
well as the owner of a network of gasoline stations in 
Armenia.  "Mika-Cement" plans to upgrade its production 
lines and is looking for U.S. partners to purchase 
modern cement packaging lines under flexible payment 
terms. 
 
--Food processing 
Food processing has become a growth sector in Kotayk. 
Tamara produces a wide range of ice creams using a 
modern Italian production and packaging line.  Tamara 
is the most popular brand of ice cream in the local 
market.  The company also produces natural juices and 
packaged frozen fruit and vegetables.  Tamara exports 
its products to the United States and Russia. 
 
Geghard recently installed a new German line to produce 
high quality meat products.  (Both Geghard and Tamara 
anticipate using their own financial resources as well 
as credit lines provided by the Armenian branch of the 
London-based HSBC bank to expand.) 
 
Artashes Cannery is one of the oldest private food 
processing enterprises in Armenia.  The company 
produces juices, jams, and preserves for distribution 
in Armenia, Russia, and in the U.S. (mainly in the Los 
Angeles metropolitan area).  Artashes has increased its 
exports to the U.S. to meet a growing demand for its 
product. 
 
The French group Castel invested USD 18 million in 
Kotayk Brewery in 1997.  Castel owns 71 percent of the 
shares of the Kotayk Brewery and Mr. Gagik Tsaroukian, 
an Armenian businessman, 29 percent.  Mr. Tsaroukian is 
also the owner of Multi Group, that includes a number 
of companies mainly based in Kotayk province, 
specializing in dairy production, stone processing, 
wholesale and retail trading and wine making. 
 
"Zohrabyani Tigran Mets" company, based in the town of 
Yeghvard, produces high quality dairy products with 
technical and marketing assistance of the USDA 
Marketing assistance project in Armenia. 
 
Kotayk is home to several mineral water bottling 
plants.  One of these, Bjni, is a member of the SIL 
Group, a large holding company in Armenia.  "BML-Arzni" 
LLC, owned by several local and foreign investors, 
produces Arzni mineral water, a popular brand in the 
former Soviet Union markets.  The company's products 
are marketed in the Middle East and Europe. 
 
--Tourism 
Tourism is one of the province's most promising sectors 
for foreign investors.  The winter resort town of 
Tsakhkadzor is a popular tourist destination.  Located 
 
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2,000 meters above sea level, its climate ranges from 
plus 30 degrees Celsius in summer to minus 30 degrees 
Celsius in winter with 260 days of sunshine per year on 
average.  The mountains near Tsakhkadzor host a ski 
resort.  During the Soviet era, the town attracted 
tourists and professional sportsmen from the Soviet 
Union and abroad.  The Tsakhkadzor Sports Complex was 
the main training center for the Soviet National 
Olympic team.  A number of spas and hotels in 
Tsakhkadzor are interested in cooperating with U.S. 
 
SIPDIS 
companies to help refurbish their facilities to meet 
international standards. 
 
¶5.  Many companies in Kotayk have growth potential. 
Most wish to cooperate or establish a partnership with 
foreign investors, and some of these offer interesting 
investment opportunities.  The Embassy encourages 
interested U.S. firms to contact the Economic- 
Commercial Section of the Embassy or the BISNIS Trade 
Specialist for Armenia Joan Morgan by phone at: (202) 
482-2709 or e-mail at . 
 
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INVESTMENT OPPORTUNITIES 
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Construction Materials 
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¶6.  Company:  Armavto.  Established in the city of 
Charentsavan in 1980, this formerly state-owned 
forklift plant was converted into a private company in 
¶1994.  It produces small tonnage forklifts and electric 
loaders with 1 ton lift capacity.  During the Soviet 
era, Armavto was the monopoly supplier to the Soviet 
market.  The company now employs 250 people.  It also 
produces steel balls for mills.  The company's sales in 
2001 totaled USD 1.4 million.  Armavto owns 37,900 sq. 
meters of production space and 6,100 sq. meters of 
storage facilities. 
 
¶7.  To expand its activities, Armavto seeks a U.S. 
partner to establish the production of basalt fiber 
used in manufacturing of pipes, fittings, roofing 
insulation materials etc.  A U.S. partner would be 
expected to provide technology and equipment. 
Armavto's contribution would include the labor, 
production space, established distribution network in 
Armenia, and financial investment of up to 30 percent 
of the total investment amount.  The total investment 
for this project would be USD 1.5 million. 
 
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DAIRY PRODUCTION 
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¶8.  Company:  Zohrabyani Tigran Mets JSC.  Zohrabyani 
Tigran Mets (ZTM) Joint-Stock Company was established 
in 1997.  It is involved in the production of dairy 
products, including sour cream, curds, and butter.  The 
USDA Marketing Assistance Project in Armenia is 
providing technical and marketing assistance to ZTM. 
ZTM plans to expand its capacities.  The company 
proposes a partnership opportunity for a U.S. company 
in the production of dairy products.  ZTM seeks a 
partner who can purchase and install a modern milk 
processing and packaging line.  The proposed investment 
is USD 100,000 with a payback period of 3 years. 
 
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Trade opportunities 
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Construction materials 
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¶9.  COMPANY:  Mika-Cement JSC.  Mika-Cement Joint-Stock 
Company owns and operates the Hrazdan Cement Plant, 
which was established in 1970.  The plant was 
privatized in 2001.  The company wishes to purchase a 
new/used cement packaging line with the capacity of 50- 
100 tons/hour.  The total amount of this deal would be 
up to USD 500,000. 
 
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Telecommunication services 
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¶10.  Company: Telnet LLC.  Telnet is a private Internet 
services company established in 1999.  Telnet plans to 
upgrade its equipment and seeks a U.S. supplier of the 
multiport device for a dial-up connection.  Shipping 
terms: CIP Yerevan.  Payment terms:  negotiable.  U.S. 
dollar value: 3,000. 
 
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USEFUL CONTACTS 
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¶11. For more information on business opportunities in 
the province of Kotayk, please contact: 
 
George Isayan, BISNIS (Business Information Service for 
the Newly Independent States, U.S. Department of 
Commerce) representative for Armenia, U.S. Embassy 
Yerevan, 18 Marshal Baghramyan Ave., Yerevan-19, 
Armenia, Tel: (374-1) 521-611, Fax: (374-1) 520-800, 
E-mail:  
website: . 
 
Vladik Nahapetyan, Head of the financial and economic 
development department, Kotayk Governor's Office 
Tel: (374-23) 25-301 
 
Arsen Khachatryan, Head of the social-economic 
development department, Kotayk Governor's Office 
Tel:(374-23) 25-301, e-mail: ars5620@yahoo.com 
ORDWAY