The Central Asian countries are rich in natural resources, and Azerbaijan is among them. With a population of 10.3 million and an area of around 86,600 km2, Azerbaijan has many established industrial sectors, but the mining sector contributes the most to its economic stability, especially in terms of oil products.
With excess natural gas production, Azerbaijan exports these resources to other countries, boosting its economy. Although industrial growth is increasing the demand for oil and fossil fuels every day, Azerbaijan's GDP fell by about 3.5% in 2022.
Image Credit: Said M/Shutterstock.com
Azerbaijan: A Country with a Huge Wealth of Minerals
Azerbaijan has a significant volume of natural resources and minerals, a major source of income for the country. For example, oil reserves cover more than 70% of the area.
Although the resources are confined to oil and gas, various mining companies operating in Azerbaijan also extract non-metal minerals, including gypsum, Gobustan, and Tovuz Limestone.
The nation also has mineral springs with varying chemical buildup. Notable minerals distributed throughout Azerbaijan include precious metallic minerals such as iron, silver, gold, and other resources like molybdenum, lead, and aluminum.
Throughout 2022, Azerbaijan experienced a considerable increase in the profits generated from exporting oil and gas products. One of the main reasons for this drastic growth is the agreement between the European Union and the government of Azerbaijan to export gas.
Most of the countries in the European Union imported gas from Russia for everyday use. However, the recent conflict between Russia and Ukraine has forced the European Union to look for alternatives to decrease its dependence on Russian gas significantly. In this scenario, Azerbaijan was the next top contender. The contract allowed Azerbaijan to sell twice the normal volume of natural gas to European countries. Serbia completed a pipeline for the gas being imported from Azerbaijan, cementing the importance of Azerbaijan for other countries.
In another significant development, Azerbaijan’s state-owned oil company SOCAR signed a contract with Romgaz S.A. (a Romanian organization) to export around 300 million cubic meters of natural gas to Romania. These contracts ensured that the revenue generated by the sale of gas and oil found abundantly in Azerbaijan increased massively.
State Customs records show that the state earned a massive 33.6 billion dollars from oil and gas exports. Sales doubled for the financial year 2022, cementing the fact that Azerbaijan's economy is heavily reliant on the sector.
Regional Distribution of Minerals and Resources in Azerbaijan
Certain regions of Azerbaijan, such as the Absheron Peninsula, Baku, and the Absheron archipelago, contain the most significant reserves of oil and gas fields. The southern part of East Shirvan, Gobustan, and Siyazan are known worldwide for their oil reserves.
Experts have identified four major types of iron ore in Azerbaijan. These include segregation-magmatic iron ores, skarn-magnetite ores (contact-metasomatic), hydrothermal-metasomatic ores, and sedimentary ores. However, only one type of iron ore is used in industrial processes: skarn-magnetite iron deposits. Iron ores are extracted from volcanic rocks, pyroclastic mountains, and volcanic sedimentary rocks.
Azerbaijan has copper ores found in formations of copper pyrite and copper porphyry. The mineral composition of copper-pyrite ores primarily includes pyrite and chalcopyrite. Furthermore, sphalerite and galena are present in the ore. The porphyry copper formation also contains molybdenum, precious metals, and copper.
New Development in Azerbaijan's Mining Sector
The UK-based company Anglo Mining PLC has signed a contract with the government of Azerbaijan. The company’s experts have already performed an expert analysis in the Gdabek region and forecast that the area contains a fair amount of precious natural resources.
The initial results are encouraging, with the company estimating the presence of 22 million tons, including the volume of copper mineral to be around 106,000 tons. Following the Australasian Code for Reporting Exploration Results, Mineral Resources and Ore Reserves (famously known as the JORC standard), the mineralization volume of 24.9 tons was estimated, with the average copper content calculated to be around 0.5%. In the future, the company will start the mining operations.
Sustainability in the Mining Industry of Azerbaijan
Every country has set a goal to eliminate harmful emissions and save the environment. This is seriously affecting the operations of many industries, such as the mining and manufacturing sectors. Azerbaijan's economic stability relies on exporting fossil fuels, especially natural gas and oil, so the transition to alternative energy sources will cause serious trouble for exporting these resources.
Save this article for later reading
Climate Policy has an article that states that the government of Azerbaijan must plan efficiently to tackle this tricky situation by reducing the harmful effects of mining. A good practice may be to design specialized policies that favor carbon pricing after 2030 and reduce taxes on sustainable mining operations.
By carefully implementing a policy to significantly reduce carbon emissions, Azerbaijan could stimulate economic growth and enhance economic diversification. However, the world's interest in Azerbaijan's oil reserves ensures that revenue generation will surge as the demand for oil increases globally and contributes positively to its economy.
References and Further Reading
Asian Development Bank, (2023). Azerbaijan - Asian Development Outlook April 2023. [Online] Available at: https://www.adb.org/sites/default/files/publication/863591/aze-ado-april-2023.pdf [Accessed 19 March 2024].
Azerbaijan Government, (2024). Minerals. [Online] Available at: https://azerbaijan.az/en/related-information/12 [Accessed 17 March 2024].
BBC, (2024). Azerbaijan country profile. [Online] Available at: https://www.bbc.com/news/world-europe-17043424 [Accessed 16 March 2024].
CEIC Data, (2023). Azerbaijan Industrial Production: Value: Mining and Quarrying. [Online] Available at: https://www.ceicdata.com/en/azerbaijan/industrial-production-value/industrial-production-value-mining-and-quarrying [Accessed 20 March 2024].
Eurasianet, (2023). Azerbaijan Sees Oil And Gas Revenues Grow Significantly In 2022. [Online] Available at: https://oilprice.com/Latest-Energy-News/World-News/Azerbaijan-Sees-Oil-And-Gas-Revenues-Grow-Significantly-In-2022.html [Accessed 18 March 2024].
Mammadov, S., (2024). Azerbaijan developing significant gold, copper and other minerals resources. [Online] Available at: https://www.intellinews.com/azerbaijan-developing-significant-gold-copper-and-other-minerals-resources-314066/ [Accessed 19 March 2024].
U.S. Geological Survey, (2019). 2019 Minerals Yearbook. [Online] Available at: https://pubs.usgs.gov/myb/vol3/2019/myb3-2019-azerbaijan.pdf [Accessed 20 March 2024].
Chepeliev, M. et. al. (2024). Azerbaijan: pathways for decarbonization in a global context. Climate Policy, 1-16. Available at: https://doi.org/10.1080/14693062.2024.2330378
Disclaimer: The views expressed here are those of the author expressed in their private capacity and do not necessarily represent the views of AZoM.com Limited T/A AZoNetwork the owner and operator of this website. This disclaimer forms part of the Terms and conditions of use of this website.