Azerbaijan to buy back gold mining operations from president's daughters

By bne IntelliNews May 27, 2016

The Azerbaijani government will buy the stakes of foreign offshore companies in several mines in the west of the country, according to a decree signed by President Ilham Aliyev on May 25. 

The offshores in question - Londex Resources (45% share), Willand Meyris (29%), Fargate Mining Corporation (15%) and Globex International (11%) - had received their license under the name of Aimroc, a mining company that appeared seemingly from nowhere and that several investigations, including the Panama Papers, have linked to the country's first family. 

The government will buy the stakes though the ecology and natural resource ministry and state-owned Azergold. The offshore companies have stakes in Garadagh, Chovdar, Geydag, Dagkesemen, Kohnemadan and Kurekay mines. 

Aimroc received the mining licences over the six mines, which are estimated to hold billions of dollars worth of reserves, in 2007. Since then, however, the company has not reported its production levels or financial situation. In 2014, it surfaced it was unable to pay its employees.

According to the Panama Papers cache, Londex Resources and Fargate Mining were incorporated in Panama on the same day and are controlled by one of President Ilham Aliyev's close associates, Nasib Hasanov. Presidential daughters Leyla and Arzu Aliyeva are reportedly owners of Globex International, according to an investigation by Radio Free Europe/ Radio Liberty and own a 45% stake in Londex Resources as well.

According to the Organised Crime and Corruption Reporting Project (OCCRP), Londex Resources spent $230mn in setting up a mine in the town of Chovdar, and produced some $30mn worth of gold before it ceased operations and disappeared. The source says that one of the reasons why it disappeared is because it had a hard time selling gold on international markets due to its secretive ownership.

Azerbaijan began developing its gold industry in 1997, when it signed the first production sharing agreement (PSA) for a mine in Chovdar with Delaware-based RV Investment Group, now known as Anglo Asian Mining. After the price of gold increased fivefold between 2001 and 2009, the country's leadership also took interest in the sector. Anglo Asian Mining is listed on the London Stock Exchange and owned by Iranian-American citizen Reza Vaziri, who was revealed to be close to the ruling elites by the Unaoil document cache.

Baku has not revealed what the cost of the purchase to the state budget will be. Aimroc had signed a PSA with the government for 30 years in 2007, and had engaged to invest between $1bn and $3.5bn in developing the mines. 

Related Articles

BP, Socar extend production sharing deal on largest Azerbaijani oil field cluster to 2050

British oil major BP and Azerbaijani national oil company Socar on September 14 signed a contract extending their production sharing deal for Azerbaijan’s biggest cluster of oil fields until 2050. ... more

Fitch downgrades Azerbaijan's Accessbank to 'BB-'

Fitch Ratings downgraded the long-term issuer default rating of Azerbaijan's Accessbank from 'BB+' to 'BB-' with a stable outlook on September 6, while affirming its viability rating at 'f'. One ... more

Israel's defence ministry halts drone exports to Azerbaijan amid investigation

Israel's defence ministry has halted a company's exports of "suicide" drones to Azerbaijan in the midst of an ongoing investigation, newru.co.il reported on August 29. Aeronautics Defence Systems ... more

Dismiss