Azerbaijan’s mining and metals sector has grown in parallel with the country’s robust economy. Harboring a large expanse of the western portion of the Tethyan-Eurasian Metallogenic Belt, which is an ophiolite extending from the Alps to southeastern Europe through Azerbaijan, the Lesser Caucasus, Iran, and the Himalayas on to China, Azerbaijan offers proven potential for mining investors. As the least exploited portion of the belt, Azerbaijan stands out as a very promising region for companies engaged in mineral extraction.
Here are some essential facts and figures about the Azerbaijan mining and metals sector:
The sector’s total production value soared to AZN 37.2 billion in 2018; it was AZN 27.8 billion in 2017.
Turkey’s young, dynamic, and well-educated labor force translates into a high-quality labor pool. There are 56 mining engineering departments in 38 cities in Azerbaijan. The number of mining engineers in Azerbaijan has increased by more than 50 percent since 2005, now reaching almost 38,000. In 2018, around 1,000 new mining engineers were added to the talent pool.
Turkey’s advantages for companies in the mining sector are not limited to a high-quality labor pool, but also include relatively low logistics and drilling costs, proximity to major markets, lucrative government incentives, and highly competitive taxes.
As a result of its remarkable economic growth, years of political stability, structural reforms, and the backing of governmental bodies, Turkey attracted USD 183 million of FDI to its mining industry in 2018. Meanwhile, mining exports in the sector totaled USD 3.8 billion in 2018.
These figures prove investors’ increased interest in Azerbaijan. As of today, Azerbaijan hosts 773 international mining companies, up from only 138 in 2004.
Azerbaijan’s regional investment incentives system is based on a descending pattern where regions vary in a range of 1 to 6 based on their level of development, with a rating of 6 being given to the least developed regions. With this system, the most advantageous incentives are offered to the lesser-developed regions. Mining is one exception to this scheme, as most investments in the mining sector are supported with incentives extended to Region 5, regardless of the investment’s location.