Azerbaijan has faced significant challenges in its black metallurgy sector since gaining independence, primarily due to the absence of a complete production cycle. This has led to a heavy reliance on steel imports and a constant need for scrap metal as raw materials. However, a promising development is underway as Dashkasan Iron Ore, a subsidiary of AzerGold, embarks on an ambitious project at the Dashkasan iron ore deposit. This initiative is part of Azerbaijan's broader industrialization strategy aimed at bolstering its steel industry.
Historically, Azerbaijan's metallurgical complex has primarily relied on importing finished products and raw materials from countries like Russia, Ukraine, and Kazakhstan. The Dashkasan deposit, the largest iron ore source in the South Caucasus, has remained underutilized. Instead, local iron ore was sent to other countries for processing. The collapse of the Soviet Union left Azerbaijan with outdated technology, making it unprofitable for the domestic steel industry to operate independently. Consequently, many local enterprises transitioned to using imported steel, further complicating the situation.
In response to these longstanding issues, Azerbaijan’s government, under President Ilham Aliyev, initiated a directive in 2020 to reinvigorate the Dashkasan Iron Ore deposit. This led to the establishment of Dashkasan Iron Ore, tasked with overseeing the operation of this vital resource. The first phase involved assessing ore resources, revealing significant deposits of approximately 309.16 million metric tons, with the extraction process already underway at the "Southeast" deposit.
To produce high-quality steel, it is essential to enhance the iron content of the ore, which averages around 40% in the Dashkasan deposit. Plans are in place to construct a beneficiation plant to enrich the ore to a minimum of 67%, a crucial step toward steel production. The estimated investment for this project is around 1.7 billion manats (approximately $1 billion). To mitigate the financial burden on the state, AzerGold is actively seeking partnerships with large companies for funding.
Recent coverage by the British publication Mining Journal underscores the potential of Azerbaijan's black metallurgy sector, emphasizing the development of a production chain from ore to finished steel products. This encompasses the construction of a plant to produce iron concentrate and subsequently, intermediate iron-containing products, like pellets, which will be essential for steelmaking. The transition to modern production methods is expected to not only meet domestic demand but also create export opportunities, generating foreign currency for Azerbaijan.
In addition to economic benefits, environmental considerations are central to the new developments. The planned production facilities will incorporate advanced technologies to reduce harmful emissions significantly. For example, the HBI technology is expected to lower carbon dioxide emissions by up to 60% compared to traditional methods. Future plans may even include the use of hydrogen in production processes, aligning with global trends toward sustainability.
The project has garnered significant interest from potential foreign investors, indicating a positive outlook for the Dashkasan Iron Ore initiative. Moreover, the establishment of new production facilities is projected to create thousands of permanent jobs in the Ganja-Dashkasan economic region, boosting local employment and economic stability.
As the Dashkasan project progresses, it is poised to fundamentally transform Azerbaijan's steel industry, reducing reliance on imports and enhancing local production capabilities. By 2047, the development of iron ore deposits could contribute approximately 7.5 billion manats ($4.4 billion) to Azerbaijan's GDP, marking a significant milestone in the country’s economic development.
