Fundamental breakthrough: Mining and metallurgy as a new driver of Azerbaijan's economy

The mining and metallurgical industry is becoming one of the key drivers of long-term growth in Azerbaijan, forming the foundation for economic diversification and increasing the export of high-value-added products.

In the context of global economic transformation and growing demand for metals, the development of this sector is gaining priority importance, becoming one of the critical factors in strengthening the country's economic resilience.

President of Azerbaijan Ilham Aliyev signed an Order on a series of measures to ensure the development of the mining (metal ore) and metallurgical industry in the Republic of Azerbaijan.

The Order notes that the development of the mining (metal ore) and metallurgical industry in Azerbaijan is of strategic importance in terms of economic diversification, deepening industrialization, expanding export structures, and accelerating the socio-economic development of regions.

"As a result of reforms carried out over the past years, the foundations for industrial production of aluminum, gold, silver, and copper have been established, and part of the metal ore reserves has been directed toward industrial use. Through the Closed Joint-Stock Company AzerGold, industrial extraction at deposits of precious and non-ferrous metals has been organized, and modern processing infrastructure has been created.

The modernization of ore processing enterprises in the Dashkasan and Gadabay districts, as well as the commissioning of promising deposits in the territories liberated from occupation, have expanded the production and export capabilities of the mining (metal ore) and metallurgical industry. Alongside this, the creation of the Western Industrial Park allows for the expansion of iron ore processing and the deepening of the value chain in the metallurgical industry," the document emphasizes.

At the same time, the head of state considers it necessary to take additional measures aimed at the efficient use of the existing mineral resource base, strengthening production links between extraction and processing stages, aligning infrastructure and logistics solutions, and expanding public-private partnerships: "The growing demand for metals amid the energy transition in the global economy and the development of high technologies further increases the strategic importance of this sector. The rich mineral resources of the Republic of Azerbaijan, competitive energy supply, industrial incentive mechanisms, and the country's location on the Middle Corridor create favorable conditions for the sustainable development of related industrial sectors."

To accelerate the development of the mining (metal ore) and metallurgical industry in the country across the entire value chain—from raw materials to finished products, the rational use of mineral resources, the expansion of high-value-added metal processing, and the enhancement of the export potential of metallurgical products—the head of state instructed the Cabinet of Ministers to:

- within four months, prepare and submit to the President a draft of the "State Program for the Development of the Mining (Metal Ore) and Metallurgical Industry in the Republic of Azerbaijan for 2027-2030."

- ensure the inclusion of the State Program in the draft "Strategy for Socio-Economic Development of the Republic of Azerbaijan for 2027-2030," as stipulated in clause 1.1 of the Order of the President of the Republic of Azerbaijan "On the Preparation of the 'Strategy for Socio-Economic Development of the Republic of Azerbaijan for 2027-2030' and the 'II State Program on the Great Return to the Territories of the Republic of Azerbaijan Liberated from Occupation'" dated May 30, 2025, number 611;

- ensure the inclusion in the draft State Program of projects currently being implemented or planned for implementation by the private sector in the field of mining (metal ore) and metallurgy, as well as the determination of mechanisms for their support within the framework of the State Program;

- ensure the inclusion in the State Program of the following measures to increase the production capacity of the Limited Liability Company "Azeraluminium" along the value chain "raw materials-processing-final product" and to expand its export opportunities:

- completion of the electrolysis plant project and bringing its annual production capacity to 100,000 tons by 2030;

- continuation of the aluminum rolled products production project and bringing its annual production capacity to 50,000 tons by 2030;

- in accordance with the feasibility study prepared by the Azerbaijan Investment Holding, ensure the identification of funding sources and, together with relevant state bodies (agencies), the implementation of the construction of a calcination and anode baking plant;

- to enhance the competitiveness of metallurgical products, take measures to improve energy and transport tariffs, and if necessary, allocate additional land plots and meet electricity demand;

- take necessary measures to finance the projects outlined in clause 1.4 of this Order from the state budget, taking into account the feasibility study prepared by the Azerbaijan Investment Holding;

The Open Joint-Stock Company "Azerbaijan Aluminum" is instructed to:

- ensure the transfer of its assets to the balance sheet of the Limited Liability Company "Azeraluminium";

- take necessary measures to write off accounts payable, as well as debts to state organizations for which repayment was deferred for 25 years based on the President's Order, and debts arising before the Fund for Securing Obligations on State Debt and Guarantees;

- take necessary measures to terminate tax payment obligations in accordance with the Tax Code of the Republic of Azerbaijan.

In accordance with the Order, the Open Joint-Stock Company "Azerbaijan Aluminum" is to be liquidated.

The Ministry of Finance is tasked with ensuring the repayment of confirmed debts of OJSC "Azerbaijan Aluminum" to non-governmental organizations from the state budget of Azerbaijan or other financial sources provided by law within one month from the date of submission of relevant supporting documents. The Azerbaijan Investment Holding is to take necessary measures to address issues arising from this Order.

As evident, the measures outlined in the Order lay the foundation for the comprehensive development of the mining and metallurgical industry, the enhancement of industrial potential, and the strengthening of Azerbaijan's position in global metal markets. The initiatives also form a systemic approach to the development of this sector as a whole—from raw material extraction to the production of high-value-added products, which will contribute to sustainable economic growth and diversification of the country's economy.

In this regard, experts note that the implementation of the projects outlined in the document can significantly enhance the role of the mining and metallurgical industry in the structure of the national economy. Moreover, the steps being taken could mark a turning point in the development of the industry and its integration into global production chains.

Member of the Milli Majlis and economic expert Vugar Bayramov is convinced that the implementation of the outlined initiatives will create additional incentives for the development of Azerbaijan's industrial sector and increase its investment attractiveness.

"The implementation of the measures provided for in the President's Order can trigger fundamental changes in the metallurgical industry—primarily in terms of expanding production capacities and the country's export opportunities," he said in a comment to 1news.az.

According to him, support for local production and capacity building will lead to an increase in the share of domestic metallurgical products in meeting internal demand: "In this context, the growth of enterprise capacities will play a key role in meeting the country's domestic needs."

At the same time, the parliamentarian emphasized that this also concerns the creation of new export opportunities. "Given the high demand for metallurgical products in the region, new projects will create favorable conditions for increasing Azerbaijani exports and strengthening the role of metallurgy in the structure of non-oil exports."

Special attention, according to him, is deserved by the systemic support for the private sector: "This applies to both ongoing projects implemented by private companies and prospective initiatives. These projects will serve as practical tools for expanding the participation of private business in strategic state programs and increasing its production and export capabilities."

Vugar Bayramov placed particular emphasis on the synchronization of the new State Program with national priorities such as the Great Return Program and the Strategy for Socio-Economic Development of Azerbaijan: "In my opinion, this will allow for more effective utilization of the metallurgical potential of regions, including liberated territories, and will strengthen the role of the industry in the restoration of Karabakh and East Zangezur, the development of infrastructure, and the integration of the regional economy."

"Overall, the implementation of these steps will significantly strengthen the position of the metallurgical industry in the non-oil sector and transform it into one of the key drivers of its growth," he concluded.

Thus, the measures outlined in the Order will form the basis for the long-term development of this strategically important industry and the strengthening of its role in Azerbaijan's economy.