Our new
project we are intensively working at is construction of a shop for processing
waste batteries. It would be good to launch that project in April. We know the
amount of investments and the funding sources and we also preliminarily know
our possible partners and contractors. We have not yet taken any decisions on
the equipment suppliers, however, we are conducting the relevant surveys. We
are going to hold a tender on equipment delivery and involve the most advanced
companies – Italian, French, U.S., Russian ones – to find the best price/quality
ratio. We have an interesting statistics on lead extraction and processing. The
more developed the state is, the more lead is processed in it. For instance, in
the United States the lead processing is 4 times as much as the extraction.
Mr. Mkrtchyan, I would like you tell me
about the two most important aspects of the project, particularly, the economic
benefit and the environmental component.
The on-site
lead processing will allow reducing the prime cost of battery production by
15-20%. What is a battery? Actually, it is the lead in polypropylene covered
with sulfuric acid. It is the lead that makes up the major part of the battery
value.
In the
meantime, it is one of the rare cases when economic interests coincide with
environmental ones. Suppose, 1 thsd tons of sulfuric acid mixed with lead
dioxide is annually emitted into the environment. I do not know what happens to
the waste lead. I think it is exported, but without sulfuric acid, which sinks
in the soil, penetrates into the ground water and inflicts tangible damage to
our country’s ecology. Just imagine that the vegetables and fruit we eat might
be watered with the water that contains lead oxide, which is poison. I have
surveyed the market and found out that Armenia lacks companies licensed to
process lead. At the moment, we are trying to get a permit for processing
dangerous substances, their assembly and transportation. This is a complicated
license that lays down complicated demands.
I should
say that all our key competitors engaged in battery production also process the
products. Actually, processing should be followed by production. We experience
the opposite situation and now we are correcting that situation.
Will the
locally processed lead have better quality than the lead imported by Elbat?
When you
have your own production, you obtain much better lead than when you import it.
Following the processing, the lead quality is higher because after the
refinement you bring it in compliance with the required quality standards.
Suppose, we buy the lead from Russia and Italy and it has some deviations from
the necessary parameters. As a rule, we do not return the lead to the supplier,
because it is rather disadvantageous in terms of transport costs and in that
case the only thing one can do is reduce the delivery price. The local
processing primarily guarantees high quality. The keystone of the battery is
the lead.
By the
way, when you buy a new battery, the sellers ask you to give the old one. What
do they take it for?
Unfortunately
or fortunately, I do not know how the waste batteries are used now. I suppose
they are exported, because no one processes them in Armenia and no one needs
them here. But I should say that when being exported the sulfuric acid
penetrates into the environment.
The idea
to use the waste is nothing new in Armenia, and it is already being practiced
at a fittings plant, for instance. Are there enough waste batteries in
the republic for your production?
Of course,
there are not. We are taking measures to acquire old batteries from the
neighboring countries, e.g. from Georgia. There are several such processing
plants there but they have low capacities. In addition, we sell our batteries
in Georgia; therefore it will be easier for us to assemble the waste batteries.
We are going to import from Georgia around 1 thsd tons of lead per annum.
According to our arrangement, we are going to receive old batteries in exchange
for the newly supplied ones. The transportation costs are somewhat higher but
the game is worth the candle.
How much
does the project cost?
The cost of
the project ranges from 3.2 mln to 4.5 mln EUR, VAT exclusive. These are simply
capital investments. The payback period may range from 2.5 to 3 years.
Who is the investor?
Will it be private funds of the shareholders or borrowed ones?
I think, it will be borrowed funds.
When do you plan to
launch the construction of the processing shop?
We look forward to launching the construction in June
of the current year. We will produce lead, at least, in a year.
Do you plan to open
more workplaces?
Sure, we will. However, the processing is automated and we
need a limited number of workplaces. I think, together with the administrative
staff, we will have up to 20 new workplaces.
As for the lead processing,
will it have any negative impact on the environment?
We pay a high attention to the environment. As many as
1.5 million EUR of the total investments will be spent on purchase of special
filters. I assure you, it will be pure production without any health impact.
Construction of the battery factory in Yerevan was
quite a risky undertaking given the stiff competition with importers. Don’t you
think that you have proved to many in our country that industrial production
development is possible in Armenia?
We have already proved that in our country it is
possible and necessary to develop industrial production. Inherently, we are
producing a very important, if not strategic, product. The company is on the
verge of broad changes. You will see, our cars will be replaced with
electro-mobiles in the not so distant future, and then we will need to produce
batteries of new generation. We are thinking ahead.