An extremely partly AI-generated long read, featuring Konstantin Sokolov
May 15, 2026
Nerves And Bones: The Two Metals Behind Modern Warfare
In today’s global economy, copper is increasingly viewed by investors as a strategic industrial metal comparable in importance to gold for the energy transition. The Teghut deposit, located in Armenia’s northern Lori region, is no longer just a deep open-pit copper and molybdenum mine. It is a strategic resource, with an estimated in-situ value of roughly $22.2 billion at current prices (1.6 million tonnes of copper at $9,500/t and 100,000 tonnes of molybdenum at $70,000/t). Actual recoverable value would be lower, depending on ore grade, recovery rates and processing losses.
Back in the early 2010s, copper traded in a comfortable range of $7,000–8,000 per tonne. By May 2026, tightening supply and rising demand from China’s power grid, renewables and AI sectors had pushed copper prices back toward historical highs.
Fundamental demand growth is driven by the global energy transition, the expansion of AI infrastructure and power grids. Alongside these, the military‑industrial complex is playing an accelerating role, where the copper‑molybdenum pair is particularly important.
Copper is often described as the “nervous system” of modern warfare. High‑density winding of fine copper wire enables compact, powerful drone motors. Its exceptional conductivity ensures signal precision in guidance systems where every gram matters.
Molybdenum is the “skeleton” of defence manufacturing. Extremely heat‑resistant and hard, it is a critical alloying element for super‑strong armour and artillery barrels that must withstand extreme thermal loads.
In this paradigm, Teghut’s processing plant — with a design capacity of 50,000+ tonnes of copper concentrate per year (not refined copper) — transforms the mine from a troubled legacy asset into a strategically important asset for Armenia.
How The Story Starts
The man who started it all is Valeri Mejlumyan — a Russian-Armenian businessman who, in the late 1990s, pushed his Vallex Group, to develop the Teghut deposit.
Vallex was no stranger to the region. It already controlled copper smelting and mining assets in Alaverdi, Lori province — operations with a history stretching back more than 240 years. Teghut, by comparison, was a greenfield project. But the prize was enormous.
According to Soviet-era exploration carried out in 1972 and later updated, the Teghut deposit contained:
- Ore: ~450 million tonnes
- Copper (Cu): ~1.6 million tonnes
- Molybdenum (Mo): ~99,000–100,000 tonnes
- Gold (Au): ~4.8 tonnes (C2 category, average grade 0.6 g/t), plus roughly 303.8 tonnes of silver, recovered as a by-product during copper-molybdenum processing
For a region that had been mining metals since Catherine the Great, Teghut was the future. But turning Soviet-era numbers into a modern mine would take more than geology. It would take money — and that meant finding a Russian bank willing to bet on Armenia.
Debt, Defaults And Restarts: Timelines
Timeline1: development of the mine
- February 2001. Armenian Copper Programme (ACP) received a 25-year licence to develop the Teghut copper-molybdenum deposit. The licence was later transferred to a subsidiary, Teghut CJSC.
- 22 May 2006. Teghut CJSC was established as Vallex Group’s operating company for the project.
- November 2007. The Armenian government approved the project.
- 2014. The processing plant was launched in December, with Armenian president Serzh Sargsyan attending the ceremony. The company planned to produce $182 million worth of output in 2015.
- January 2018. Untreated waste leaked into the Shnokh river, causing severe pollution. The plant was shut down.
- 2018. After the mine stopped and Teghut CJSC defaulted on its VTB loan, the bank itself became the de facto controller of assets and operations. A new management team was brought in. The press service confirmed the company was no longer linked to Vallex.
- 2019. A Bulgarian company conducted a six-to-seven-month study of the tailings dam’s stability. Engineers warned that a breach could cause an environmental disaster, flooding nearby villages and a railway.
- 2019. Production resumed. The plant was restarted.
- 2019. VTB announced it was ready to return the asset to the Armenian government.
- 3 October 2019. ACP shares were transferred to a nominee representative of VTB.
- 2021. The tailings dam was reinforced amid concerns about slope stability and the potential downstream impact on nearby settlements.
- March 2022 – July 2023. Mining and processing were suspended.
- 2022. Blocking sanctions were imposed on VTB, the project’s main creditor.
- August 2023. Production resumed in full. Teghut CJSC signed a new mining contract and extraction permit, allowing it to mine up to 105 million tonnes until 2031.
Timeline 2: financing the project
- 27 May 2008. VTB Bank (Russia) and Armenian Copper Programme (ACP) signed a $249.5 million, 12-year loan agreement in Yerevan to develop the Teghut deposit. ACP held the licence.
- Late 2008. VTB disbursed the first tranche of $30 million. Vallex Group’s own investment in the project was roughly $44 million (according to media and VTB, partly confirmed by ACP’s financial statements).
- 2011. A new credit agreement between VTB and Teghut CJSC was signed for $283.3 million (likely the original $249.5 million plus the $30 million tranche). The interest rate was 10.6%, indexed to copper prices, with a cap of 11% (ACP 2017 annual report).
- 2013. PensionDanmark invested $62 million through the Danish export credit agency EKF. The money was used to buy equipment from the Danish conglomerate FLSmidth.
- 30 September 2016. The loan was restructured with guarantees from four Vallex Group companies. Additional collateral included a pledge of ACP’s 50.05% stake in the Cypriot holding company Teghout Investment Limited (TIL) and a pledge by Mejlumyan of his 100% stake in ACP.
- 2017. EKF and PensionDanmark exited the project, citing environmental breaches by Teghut CJSC. VTB repaid the Danish side without losses. The $62 million is assumed to sit inside Teghut’s overall debt to VTB.
- June 2018. Teghut missed an interest payment. VTB treated this as a loan covenant breach, used its rights under the TIL pledge, and transferred ACP’s 50.05% stake to a nominee holder appointed by the bank.
- 3 September 2018. VTB demanded early repayment of principal and interest, totalling $289,469,803. When the money was not returned, VTB took enforcement action against the main and secondary guarantors and moved to realise its rights over the pledged shares. This included starting arbitration proceedings.
- 2019. Valeri Mejlumyan (through ACP) filed a so-called “Termination Proceeding” in a Yerevan court (case No. 31505/02/19), seeking to have the ACP share pledge declared void and to stop VTB from enforcing its rights under that pledge.
- 19 February 2021. VTB applied to the High Court of Justice in London for an anti-suit injunction to prevent Mejlumyan from continuing the Armenian litigation. The pledge agreement contained an arbitration clause referring disputes to the LCIA under English law.
- 25 May 2021. Mr Justice Butcher of the High Court issued a final anti-suit injunction in favour of VTB. The court ruled that Mejlumyan’s claims in the Armenian proceedings fell squarely within the arbitration clause and ordered him to discontinue the Armenian case.
- 2023. Teghut CJSC’s financial statements reclassified the entire loan from long-term to short-term liabilities.
- 2025. Principal plus capitalised interest, according to Teghut’s 2023–2024 accounts, stood at roughly $430 million.
- 03.2026. Sergei Neruchev is appointed general director of Teghut.
Previously, from 2018 to late 2021, he was CEO of AGD Diamonds, where he worked closely with VTB under a loan agreement. From 2021 to 2024, he served as adviser to the CEO of Grib Diamonds NV (Antwerp, Belgium) — then a 100% trading subsidiary of AGD Diamonds. AGD Diamonds’ debt to VTB was eventually restructured until 2033. Following the introduction of sanctions in 2023, AGD Diamonds sued Grib. According to a media report, in August 2023 — just before the sanctions took effect — Grib Diamonds NV was sold to another Russian entity for a nominal value, prompting Belgian authorities to examine whether the structure could leave the trader effectively influenced by VTB-related interests.
Neruchev was vice-governor of Sakhalin Oblast from 2004 to 2005. In April 2005, he was arrested in Saratov and charged under Part 4 of Article 159 of the Russian Criminal Code (“fraud on an especially large scale”) for the theft of two drilling rigs from a state-owned enterprise, Nizhnevolzhskgeologiya, which he had previously headed. https://www.kommersant.ru/doc/577866
- 23.04.2026. A press release on the sale of the mine mentioned a VTB loan of $308 million.
From Lori To Poti: The Logistics Chain Behind Armenia’s Copper Exports
Before 2022, Europe was the primary buyer of Teghut’s copper concentrate. The main customer was Aurubis AG, Europe’s largest copper producer and a major player in copper concentrates. Armenian customs data confirms the pattern: in 2021, Switzerland — home to the trading desks of Aurubis and other major groups — accounted for 37.5 per cent of Armenia’s total copper concentrate exports.
After 2022, the export structure changed dramatically. European buyers left. By 2023, China had become the main destination, taking 71 per cent of all exports. In 2024, that share rose to 78 per cent. Bulgaria was the second-largest buyer, with 19 per cent of the market in 2023. Switzerland’s share collapsed to just 3.4 per cent.
In a 2024 interview with Hetq.am, Teghut’s former general director Vladimir Nalivaiko confirmed that after 2022, the plant’s products were being bought by six companies from Iran, China and Russia.
Ore and concentrate are transported by truck. The M-6 Tumanyan–Teghut road was repaired before the plant’s launch in 2014. From Armenia, the product is shipped out through Georgia’s Black Sea ports of Poti and Batumi — a route that ties the mine’s logistics directly to Georgia’s port infrastructure and, by extension, to the banks that finance it.
Two Engineering Nightmares: The Tailings Dam And The Pit Walls
Teghut has long struggled with two main engineering challenges.
The first is the tailings dam. The structure holding millions of tonnes of liquid waste sits in a seismically active zone. A breach would threaten nearby villages and rivers with flooding.
The second is the pit walls. In the central part of the mine, slope failures and cracks have been recorded, endangering the haul roads that trucks use to move ore and waste.
The company carries out constant monitoring and reinforcement work. But there is no public evidence that all risks have been permanently eliminated. The real cost of keeping the mine safe is not disclosed in open sources.