Azerbaijan's non-metallic mineral resources Unlocking new economic potential

Azerbaijan is taking consistent steps towards the structural transformation of its economy, aiming to increase the share of non-oil sectors to minimize the decline in oil production. One of the key steps in this direction is the reform in the extraction of non-energy mineral resources, their processing, and the production of high-value-added products for subsequent export. 

Considerable progress has been made in recent years in this area: in particular, the state-owned company AzerGold has been actively developing gold mining, and work is underway to establish a complete cycle of ferrous metallurgy. Recently, by the decree of President Ilham Aliyev, AzerGold has been tasked with improving the management process in the field of non-metallic mineral deposits.

The extractive sector, particularly the hydrocarbons segment, has traditionally been the backbone of Azerbaijan's economy. In the modern history of the country, oil production peaked in 2010 at 50.8 million tons. In the following years, as resources were depleted, well output declined, and by 2014, production had fallen to 42.1 million tons. This year, the projected oil production volume is estimated at around 29.2 million tons. The decline in oil production is a natural process, and the government is implementing a range of measures to minimize its negative impact (for instance, in 2025, oil and gas revenues to the state budget are expected to decrease by 750 million manats). These efforts include supporting investment in the non-oil sector, industrial production, and raw material processing. The effectiveness of these steps is reflected in the fact that between 2014 and 2024, the oil and gas sector’s share of the country’s budget revenues decreased from 66% to 49%, while the contribution from non-oil sectors grew accordingly.

Nevertheless, Azerbaijan continues to place significant emphasis on the extraction and processing of mineral resources. Alongside the increase in gas and condensate production, large-scale work is underway to develop both ore and non-ore mineral resources. In particular, companies operating in the country's mining sector, such as Anglo Asian Mining Plc. (AAM) and, especially, the state-owned AzerGold OJSC, are working to increase the extraction of gold, silver, copper, and their processing using modern technologies. Additionally, for several years now, AzerGold's subsidiary, Dashkasan Iron Ore LLC (DDF), has been implementing a large-scale project at the region's largest iron ore deposit, "Dashkasan." The project aims to attract international investors and establish ore enrichment and the production of high-quality concentrates in 2025-2026, followed by the production of steel products.

This trend took a logical step forward on December 23: according to a decree signed by the President of Azerbaijan, Ilham Aliyev, AzerGold OJSC has been tasked with improving the management of non-metallic mineral deposits. AzerGold is required to engage reputable international consulting firms and, within four months, prepare and present proposals to the head of state on the analysis of the current situation in the exploitation of non-metallic mineral deposits. The company will also study the relevant market and implement measures to improve management in this area based on the results of the analysis. 

Additionally, AzerGold is expected to prepare and submit proposals to the Cabinet of Ministers within six months on the improvement of national standards for the exploration, research, development, and exploitation of non-metallic mineral deposits, in line with international standards, and take the necessary measures to address other issues arising from the decree.

In Azerbaijan, the activities related to the development of non-metallic mineral resources traditionally focus on the extraction and processing of materials for the construction sector: cut stone, finishing materials, gravel, as well as raw materials for the production of building materials—primarily cement and dry mixes based on lime, gypsum, bentonite, dolomite, and others. Specifically, the country is rich in deposits of gypsum, anhydrite, bentonite clay, limestone, marble, other finishing materials, as well as barite, semi-precious and precious stones, dolomite, Iceland spar, and more. The territories of Karabakh and Eastern Zangezur, liberated from occupation, are particularly rich in non-metallic raw material deposits.

Mineral raw material potential of the region

Overall, the territories liberated from occupation contain 155 deposits of various types of mineral resources, including 19 deposits of facing stone, 23 deposits of cut and building stone, 4 deposits of cement raw materials, 1 deposit of soda raw materials, 21 deposits of pumice and volcanic ash, 10 deposits of clay, 9 deposits of sand and gravel, 5 deposits of construction sand, 9 deposits of gypsum, anhydrite, and clay-gypsum, 1 deposit of perlite, 1 deposit of obsidian, 3 deposits of vermiculite, and 14 deposits of ornamental and semi-precious stones (agate, jasper, onyx, carnelian, nephrite, etc.). In this regard, the mountainous Kelbajar region is particularly rich in mineral raw materials, with deposits of tuff and refractory clay (used for brick production), perlite, marble onyx, obsidian, and larchite. The Zangilan region has industrial reserves of granite, marble, and refractory clay, as well as semi-precious stone deposits. The Lachin region is known for its marble, tuff, and nephrite deposits.

AzerGold OJSC is tasked with attracting investors and modern technologies to optimize the development of the country's non-metallic deposits while minimizing environmental damage during their extraction. Unlike ore deposits, the extraction of non-metallic materials is most often carried out through open-pit mining. These quarries are often located on the outskirts of cities and towns, which can have a significant impact on the surrounding environment. In this regard, international practice dictates that quarry development should include the restoration of areas damaged during mining operations once commercial activities have concluded. Reclamation typically involves the planting of forest strips or the creation of water bodies, and implementing best practices from this field would be beneficial in Azerbaijan as well.

Furthermore, it is essential to ensure the maximum possible processing of non-metallic mineral resources, minimise waste, and encourage investors to establish production of final products with a higher level of added value, including increasing the share of exports. Over the past years, Azerbaijan has gained valuable experience in supplying domestic cement and clinker to countries in the post-Soviet space. For many years, local producers have been exporting dry mixes and finishing materials to Central Asia, Russia, Georgia, as well as to Iran and Türkiye.