AND ALL THAT BRASS…

Copper import from China and other South-East Asian states has increased lately forming a favourable market situation for Azerbaijan where a copper deposit has been developed in Gadabey District since June 2009.  At the same time a number of programmes are being implemented in this country to set up industrial production with high added value. Thus for instance, Azerbaijani President Ilham Aliyev took part in a ceremony the other day to open a copper processing plant in the Sumqayit Technopark. 

Organizing a chain

More than four years has passed since the launch of the first phase of industrial facilities in the Sumqayit Technopark. A high-tech export-oriented industry has been taking shape at an increased pace in the town. "The construction of new industrial enterprises in the industrial zone of Sumqayit and the production of competitive export-oriented products is the most important part of the country's new strategy for industrialization... The efficiency of this kind of economic experiment is proved by the fact that the country's diversified non-raw material sector already today accounts for 55 per cent of its GDP," President Ilham Aliyev said at the copper plant opening ceremony in the Sumgayit Technopark. 

The new enterprise has set up an environmentally clean production of cathodic plates with the use of electrolysis and other finished products of copper. The plant furnished with high-tech equipment consists of areas for electrolysis, copper reception, smelting and vertical moulding. The facility uses copper scrap handling a monthly average of 500 tons of waste and processing it into 450 tons of anodic raw materials for further production of cathodic plates from the feedstock featuring 99.99 per cent chemical purity. The process of copper input treatment and making semi-finished products is fully automated which provides for the high quality of the finished products. In particular, modern technologies make it possible to minimize the percentage of oxygen contained in the copper and thereby tangibly increase the conductivity of copper wires.  

The customers for these semi-finished products including 8 mm copper wire are cable plants based in the Sumqayit Technopark. Their products are in high demand both in the domestic and the global markets. The launch of the new plant has enabled this country to give up importing quite expensive copper raw materials from abroad. In addition, the use of recyclable materials helps to improve the environmental situation. 

As is known, Azerbaijan is developing steel production while Sumqayit and Ganca have plants processing raw materials and smelting aluminium. Quite an efficient system has been established to collect ferrous metal and aluminium scrap. Now a similar system is to be set up to gather and deliver copper for recycling. Its major sources are the Azenerji and Bakielektriksabaka, railroad and underground transport. Copper can also be extracted from old equipment and cables of automatic telephone exchanges. Lastly, reserves of unused electric equipment with copper parts can be found in the numerous storage facilities of enterprises being privatized. But metal scrap alone will not last long. 

Steelworks set up a little more than 10 years ago and using scrap metal as their raw material have long since been short of it. This fact has repeatedly caused serious problems and even brought the works to a halt. The formation of a high-capacity metallurgical complex with full-cycle production from ore to finished products has started in Ganca Region just in order to overcome the dependence of domestic steelworks on recyclable materials. 

Copper ore is not much of a problem in Azerbaijan. Since June 2009, copper deposits have been developed in Gadabay District and an enterprise has been in operation to process that ore into concentrate. Its industrial development started back in 1864. Until World War I, mineral resources - copper, silver and gold - were produced in Gadabay by the renowned German company Siemens. It extracted about 2m tons of copper ore from the local subsoil during the half century. To all appearances, copper reserves in this deposit are still sufficient for profitable industrial production. According to estimates by specialists of the US consulting company SRK, the resource base of the Gadabay deposit is estimated at 49000 tons of pure copper. 

Anglo Asian Mining, a company developing this deposit, has already approached an annual level of ore production and its processing into concentrate sufficient for the production of 250-plus tons of copper which is sold in world markets through their partner company Glencore International. 

It is noteworthy that Gadabay District is by far not the only place earmarked for copper production in Azerbaijan. Even greater copper reserves have been found in the deposits of "Marif" and "Gosa". The latter is located in Tovuz District and its potential reserves are estimated at 5m tons of ore. Given its copper ore reserves, Azerbaijan can in the foreseeable future join the club of states exporting this strategically important raw material. More than that, having modern plants in the Sumqayit Technopark making copper cables and other finished products, this country can export high added-value products rather than the raw material. 

Metal in demand

As regards the demand for copper products, in particular power cables, copper importers have become active in China and other developing countries in Asia lately which is forming a fairly favourable market situation for Azerbaijan as well. In the years previous to the global economic crisis, the copper exchange price was fluctuating between 6000 and 8000 dollars per ton. The general slump made contracts twice or thrice cheaper and dropped the price below 3000 dollars towards the end of 2008. However it is not by accident that economists dubbed copper "anti-crisis metal". The demand for it has been steadily up for more than one decade thanks to the needs of electronics, energy, communications and some other rapidly growing sectors. Despite certain decline in the demand for this metal last year, the price per ton of copper at the London Metal Exchange (LME) reached 7100 dollars in February 2014. 

By all appearances, there will be no further decline in the global demand for copper. Experts of the Money Morning investment group hold the opinion that China wants to turn primary commodities into a kind of new global currency instead of the dollar, a new payment instrument for international transactions. The main role in that case will be played by copper, rather than gold, as its practical application and potential reserves are incomparably higher. Two years ago, China announced that its strategic reserves of copper totalled 250000 tons worth 1.3bn dollars but informal sources cited a figure at least four times higher. 

One more argument in favour of an increase in the world market demand arises from the needs of the energy and transport sectors of China and other dynamically developing states in the region. According to forecasts from the International Energy Agency, energy consumption growth will keep increasing by 2.5 per cent annually until 2030. To meet the ever growing demand for electric power in the world, thousands of kilometres of copper cable will be needed. Automobile building is another important factor ensuring future demand for copper. As of today, a most ordinary medium class car contains 22.5 kg of copper. Meanwhile, a premium car may have more than 1.5 km of copper wires alone. New-generation cars (with electric and hybrid engines) the manufacture of which is growing with every passing year contain even more copper - up to 40 kg. New-generation high-speed trains use from two to four tons of copper while ordinary electric trains have one to two tons of it. 

Put together, all these open up broad vistas before Azerbaijan for sustainable export of products from its copper processing plants.