The British company Anglo Asian Mining PLC (AAM), which mines gold, silver, and copper in Azerbaijan, has completed a preliminary assessment of the mineral resources of the Kharkhar copper deposit in the Gedabek district of Azerbaijan, according to the JORC code standards.

The deposit has an estimated 22mn tonnes with a copper content of 106,000 tonnes. In addition, there are assumed to be additional mineral resources amounting to 2.9mn tonnes with a copper content of 12,800 tonnes, according to the AAM report. This means that the assessment according to the JORC code confirms the presence of mineralization at the site of 24.9mn tonnes with an average copper content of 0.48%. The total geological copper reserves at the site are estimated at around 119,000 tonnes.

AAM plans to start mining at the Kharkhar deposit in 2026 and to extract approximately 9,000 tonnes of copper per year over a period of seven years. The terrain of the Kharkhar deposit allows for open-pit mining.

A PSA type contract with the British was signed on August 21, 1997, and involved the development of six deposits in the country. Azerbaijan's share in the contract is 51%, while AAM holds a 49% stake. Under a new agreement signed in September 2021, the company acquired three new contract areas and relinquished rights to one. Thus, the company currently holds rights to develop eight contract areas in Azerbaijan.

According to Azerbaijani media, in January 2024, it was reported that the British company AAM obtained an additional loan of $5mn from the International Bank of Azerbaijan (IBA) as part of its existing credit line. The total loan amount received by AAM from the IBA reached $15mn (AZM25.5mn). The total credit line opened by the IBA for the mining company amounts to $32.3mn. Last year AAM also secured a loan of $5.6mn from Access Bank.

According to company experts, the development of this deposit, as well as other contract areas provided for by the contract, promises significant profit.

The mining industry holds one of the key positions in the development of the non-oil sector in Azerbaijan. Currently, the country's mining industry is adapting to new global approaches, issues of cooperation with partners in terms of applying new approaches and technologies, as well as increasing investments in this area, are being considered.

At present, projects related to the development of gold deposits play an important role in the economy of Azerbaijan. Discoveries of gold deposits by Azerbaijani geologists in the regions of Tovuz, Gedabek, Dashkesan, Balakan, and the Nakhchivan Autonomous Republic, as well as in Goygol, has significant potential, say experts. It is expected that more deposits will be discovered in Azerbaijan in the future.

The possibilities of the liberated territories in Nagorno-Karabakh, which have considerable potential, are also being studied. In general, Azerbaijan produces iron, aluminium, chromite, gold, silver, lead, zinc, cobalt, molybdenum ores, iron ores, and others. Iron ores are mainly concentrated in Dashkesan. Gold deposits are most widespread in the territory of the Lesser Caucasus and the Nakhchivan Autonomous Republic.

In March 2020, Azerbaijan approved the State Program for the Geological Study of Subsoil and Efficient Use of the Mineral Resource Base for 2020-2024. In May 2022, changes were made to the State Program to focus more on mining. In accordance with the amendments, a comprehensive database on the geological structure and mineral resources of the East Zangezur and Karabakh economic regions is being created in the country.

According to various estimates, the liberated territories contain 155-165 different types of mineral deposits, including five gold deposits, six mercury deposits, two copper deposits, one lead and zinc deposit, and 19 deposits of facing stones, etc.

A special place here is occupied by the Kalbajar district, where the largest gold deposit in the Caucasus, the Soyudlu deposit, is located. The Kalbajar district is one of the regions of the country richest in underground and surface natural resources. As a result of geological exploration work carried out here since the 1950s, mineral deposits have been discovered, the reserves of which have been calculated and included in the state balance. Up to 1993, the Kalbajar district had reserves of 130 tonnes of gold, 190.33 tonnes of silver, 45.82 tonnes of tellurium, 248.89 tonnes of selenium, and 939 tonnes of mercury. The Soyudlu deposit, partially extending into the territory of Armenia, consists of 23 gold-bearing veins, 17 of which are located directly in Kalbajar. In addition, there are the Agduzdag and Gyzylbulag gold deposits, the Shorbulag and Agyatag mercury deposits, and the Mehmmana polymetallic deposit.

The Lachin district (Shahkerem, Lalabagirli, Garabeyli, Feredzh), as well as Zangilan (Vezhnali), are also rich in gold. The liberated territories are also rich in various types of building materials – marble and marbleized limestone, granite, tuff, basalt, limestone. In the Agdam district, there are large deposits - Chobandag, Shahbulag, Boyahmedli.

Azerbaijani economist Vugar Bayramov, a member of the Milli Majlis Committee on Economic Policy, Industry, and Entrepreneurship commented to bne IntelliNews on the prospects of the Vezhnali gold deposit in the Zangilan district, noting that preliminary Soviet estimates made before the 1990s indicated the presence of 6.5 tonnes of gold reserves. He emphasised that thanks to advances in technology, it might be possible to extract additional amounts of gold from these reserves. Bayramov also expressed the view that the Vezhnali deposit would not only boost gold mining but also allow for the expansion of copper and other minerals extraction.

The expert expressed confidence that the development and deepening of resource extraction in the Eastern Zangezur economic region would contribute to the creation of a new processing industry in the country. He added that the extracted gold would be partly directed for processing and subsequent sale on the domestic market, which in turn would help increase foreign exchange reserves and the assortment of local products on the Azerbaijani market. Bayramov emphasised that these changes are expected in the near future and that the Eastern Zangezur region will have a significant impact on meeting Azerbaijan's gold needs.

Meanwhile, the return of resources from liberated territories to the state balance has opened new opportunities for mining companies.

In January 2023, the Joint Stock Company Azerbaijan Investment Company and StarMining LLC established a new mining company - Shahbulaq Mining LLC. The company was created for the purpose of developing the Shahbulag stone quarry in the Agdam district of Azerbaijan. The founders of Shahbulag Mining LLC contributed AZM5.1mn to its charter capital to finance the project. Notably, construction work in Agdam is being carried out using materials produced at the Shahbulag deposit. Studies have shown high durability of the white Agdam stone.

At the end of last year, the Azerbaijan International Mining Company Limited (AIMC) held a presentation in Gedabek. The presentation showcased newly acquired underground mining equipment. This equipment is intended for the development and future exploitation of the recently discovered Gilan and Zafar underground deposits. It is noted that this equipment will be used for the first time in the mining industry of Azerbaijan and meets the most modern requirements.

According to the Exploration, Development and Production Sharing Agreement, signed on August 20, 1997, between the Ministry of Ecology and Natural Resources of Azerbaijan and the American company Investment Group Services LLC, as well as an amendment to it dated June 20, 2022, AIMC has the rights to explore and develop gold, copper, and polymetallic deposits. These deposits, Gyzylbulag, Demirli, and Vejnali, are located in the liberated territories, in the Eastern Zangezur economic region.

In addition, the largest deposits of iron ore in Azerbaijan are located in Dashkesan. The industrial reserves of the Dashkesan iron ore deposits (by category A+B+C) amount to 250mn tonnes. The Dashkesan iron ore deposit fully supplied the Rustavi metallurgical plant in Georgia with iron concentrate for many years. The composition of the iron ore, which has reserves sufficient for 90 years, also includes cobalt ore of industrial significance. The Dashkesan region is also known for industrially significant cobalt ores. It is also home to the largest deposit of aluminium ore in Europe.

The gold and silver deposit located in the north of the Dashkesan region near the village of Chovdar has proven reserves of 51.1 tonnes of ore, of which 11.4 tonnes are located on the surface, the rest are underground.

The work on Chovdar is being carried out by the Chovdar Integrated Regional Processing Complex under AzerGold CJSC. Mining at this gold mine began in 2016 and allowed the mining company to become a leader among the exporters of non-oil products of the country.

The export of gold and silver earned about AZM640mn to the economy of the republic. As of July 2021, a total of more than 245,000 ounces of gold and over 434,000 ounces of silver were exported. AzerGold used to receive subsidies from the government but in the last few years is a net contributor to the budget. The gold deposits Agyokhush-1 and Agyokhush-2 included in the structure of the complex were discovered in 2017, and Marakh, located on the border of the Geokchay and Dashkesan districts, was discovered in 2018.

Since 2020, the scope of AzerGold's activities has expanded. AzerGold was also entrusted with the development and management of black metal ore deposits in the country. By the corresponding Order of the head of the state, Dashkesan Iron Ore LLC, started its activity. The main goal of this project is to put the iron ore deposits into operation in a short time and to meet the need to substitute scrap metal raw materials for the production of higher quality metallurgical products.

Copper deposits are also found in Gedabek and Kalbajar. Polymetals are mined at the Gumushlu (Nakhchivan), Mehmene (Agdere), and Filizchay (Balakan) deposits. According to the latest data, geological investigations continue at the Ortakend gold deposit in the Julfa region of the Nakhchivan Autonomous Republic, where there is an estimated 424,000 ounces of extractable gold.

Azerbaijan possesses significant natural resources, including oil and gas, which traditionally occupy leading positions in the country's resource portfolio. Additionally, the mining sector also holds substantial potential. Concrete steps were taken during the Soviet era to exploit these natural riches. However, in the post-Soviet period, the industry faced difficulties due to a lack of necessary investments, leading to delays in its development. Nevertheless, active investment attraction, as well as modernization and reforms in the mining sector, can significantly enhance the efficiency of utilising these resources, contributing to the growth of the national economy.