The Mineral Industries of the Commonwealth of Independent States in 2005

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The Mineral Industries of the Commonwealth of Independent States in 2005 2005 Minerals Yearbook COMMONWEALTH OF INDEPENDENT STATES U.S. Department of the Interior December 2007 U.S. Geological Survey THE MINERAL INDUSTRIES OF THE COMMONWEALTH OF INDEPENDENT STATES ARMENIA, AZERBAIJAN, BELARUS, GEORGIA, KAZAKHSTAN, KYRGYZSTAN, MOLDOVA, RUSSIA, TAJIKISTAN, TURKMENISTAN, UKRAINE, AND UZBEKISTAN By Richard M. Levine and Glenn J. Wallace The Commonwealth of Independent States (CIS) was created Production in December 1991 by Republics of the former Soviet Union and then extended to all the former Soviet Republics except In 2005, in the aggregate, the volume of metallic ores mined the Baltic states of Estonia, Latvia, and Lithuania. In the decreased although nonmetallic ore production increased. The adopted Declaration, the participants of the CIS declared volume of output in both the ferrous and nonferrous metallurgical their interaction to be based on the principle of the sovereign sectors increased compared with output in 2004 (table 3). The equality of all members and that the member states were output volume of individual mineral commodities with respect to independent and equal subjects of international law. The CIS is ouput in 2004 varied by commodity (table 4). not a state and it does not have supranational powers. In 2005, the members of the CIS were Armenia, Azerbaijan, Belarus, Structure of the Mineral Industry Georgia, Kazakhstan, Kyrgyzstan, Moldova, Russia, Tajikistan, Turkmenistan, Ukraine, and Uzbekistan. On August 26, 2005, The diamond cutting industry appeared to be in flux; it was Turkmenistan discontinued permanent membership and became not possible to verify the continuing existence of a number of an associate member. diamond cutting enterprises and a few new diamond cutting The stated purpose of the CIS is to provide a common enterprises apparently were established. Russia’s major economic space in the CIS region. Although they are pledged aluminum company RUSAL invested more than $100 million in to economic integration, the countries of the CIS have taken Armenal, which was owned by RUSAL. The Armenal foil plant few actual measures to make the CIS a functioning integrated reopened in December 2005 after being closed for about 1 year economic bloc similar to the European Union (EU). for renovation. Plans called for the plant to produce 25,000 metric tons per year (t/yr) of foil. The plant, which would be ARMENIA supplied with raw material from RUSAL, was expected to produce 12% of all foil produced in the CIS by 2007 (table 5; Armenia was a major producer of molybdenum. The Zangezur Azom.com, 2005§1). copper-molybdenum complex possesses large molybdenum reserves that are concentrated in the Kadzharan deposit. Besides Trade molybdenum, Armenia has significant deposits of copper and gold; smaller deposits of lead, silver, and zinc; and deposits of In terms of value, cut diamond was the country’s leading industrial minerals, including basalt, diatomite, granite, gypsum, mineral export followed by copper and ores and slags, of which limestone, and perlite. Table 7 is a list of the country’s major molybdenum ores and concentrates had the most value. The mineral reserves. country reported significant exports of iron and steel, which In 2005, seventeen mining and metallurgical enterprises were either transshipments or scrap as the county had no were in operation; the largest enterprises mined copper and domestic steel industry (table 6). molybdenum ore or extracted gold from tailings. The country also produced aluminum foil based on raw materials imported Outlook from Russia and had a diamond cutting industry using imported raw materials (Mining Journal, 2005). The country had almost Further development of the country’s mineral production no domestic fuel production and relied for electric power on a sector is projected as additional funds become available for nuclear powerplant and hydroelectric plants. It imported fuel for mineral sector development. Mineral production has been its nuclear powerplant and natural gas from Russia. increasing (except for in the diamond-cutting industry) and the The value of mineral production in 2005 totaled $180 million country is making a particular effort to attract investment in or about 5% of the gross domestic product (GDP). Mining its mining sector. Molybdenum output is expected to increase and nonferrous metallurgy accounted for 55% of the value of as a result of a successful privatization program that involved industrial production (table 1). The mineral sector accounted for 11% of the value of the country’s capital stock (table 2). 1References that include a section mark (§) are found in the Internet Reference(s) Cited sections. COMMONWEALTH OF INDEPENDENT STATES—2005 7.1 a $200 million investment that has enabled the Zangezur Production copper-molybdenum complex to begin reequipping its mining and processing operations in 2005. The goal is to increase the In 2005, production increased for practically all mineral ore-processing capacity at the Kadzharan deposit by 50% to commodities. Crude petroleum production increased by more between 12.5 and 13 million metric tons per year (Mt/yr) of than 43% compared with that of 2004 (table 11). The country was ore by 2008. The Armenian Copper Program (ACP) is also in developing its steel industry, although it is still on a small scale. the process of having the large Teghout copper-molybdenum deposit reevaluated and, if it proves feasible for development, Trade the deposit will be second only to the Kadzharan deposit in the size of its copper and molybdenum reserves. International Fuels accounted for 76% of the value of exports in 2005 companies are investing in developing gold deposits in Armenia, (table 13). The country’s major export was crude petroleum, including Ararat Gold Recovery Company (a 100% subsidiary almost all of which was sold on world markets rather than of Sterlite Ltd. of Canada) and United States-based Global Gold supplied to other CIS countries. Other mineral exports included Corp. Production of aluminum foil is also expected to increase petroleum refinery products and alumina (tables 14, 15). The with the restarting of the Armenal plant. country imported a variety of mineral commodities, including natural gas (table 15). Reference Cited Mineral Resources Mining Journal, 2005, Armenia: London, United Kingdom, Mining Journal special publication, November, 12 p. Azerbaijan’s major mineral wealth is in its oil and gas reserves. Offshore hydrocarbon structures in the Caspian Sea Internet Reference Cited accounted for most of the country’s oil and gas production. Azerbaijan’s proven crude oil reserves were estimated to range Azom.com, 2005 (December 9), Rusal’s Armenal begins production, accessed January 22, 2007, at URL http://www.azom.com/news.asp?newsID=4520. from 7 billion to 13 billion barrels (Gbbl) [or from about 950 millon meteric tons (Mt) to 1.8 billion metric tons (Gt)] based Major Sources of Information on various industry journals and Government sources. The State Oil Company of the Azerbaijan Republic (SOCAR) has Ministry of Trade and Economic Development estimated that proven reserves are 17.5 Gbbl (about 2.4 Gt) Ministry of Nature Protection of the RA using the Soviet reserve classification system. This evaluation Armenian Development Agency was not based on market economy criteria and may include National Statistical Service of the Republic of Armenia resources that are not economically viable. Estimates of natural gas reserves also vary. According to the Oil & Gas Journal, AZERBAIJAN Azerbaijan has proven natural gas reserves of roughly 30 trillion cubic feet (about 850 billion cubic meters, and BP Azerbaijan produced a range of metals and industrial p.l.c. estimates that the country has 48 trillion cubic feet (about minerals, including such metals as alumina, aluminum, lead, 1.4 trillion cubic meters) of proven gas reserves (U.S. Energy steel, and zinc. Its major importance as a world mineral Information Administration, 2006§). producer, however, was based on its petroleum extracting industry. The country has been a significant oil producer for Outlook more than a century, but recent focus has been on developing offshore resources in the Caspian Sea. Production from Although some effort has been made to promote balanced the country’s Soviet-era fields are in decline, but since mineral development of all the country’s mineral resources, independence, foreign direct investment in offshore fields had the country’s economic development has depended primarily revitalized the country’s oil sector through the development of on the development of its large offshore oil and gas resources. large-scale new projects and the refurbishment of older projects. These resources are expected to be the country’s chief source of In 2005, Azerbaijan had signed more than 20 major agreements revenue for the coming decades. to develop oilfields with approximately 30 companies from 15 In 2004, Azerbaijan exported approximately 211,000 barrels countries (U.S. Energy Information Administration, 2006§). per day (bbl/d) of oil. Exports are expected to more than double Oil extraction and refining accounted for more than 75% of to 478,000 bbl/d in 2006 and to reach as high as 1.1 million the value of industrial production (table 8). The oil extraction barrels per day (Mbbl/d) by 2008 (U.S. Energy Information and refining sectors and the metallurgy and metal fabrication Administration, 2006§). sectors employed more than 60,000 people in 2005 (table 9). Azerbaijan was a net natural gas importer in 2005. The The country was becoming a major producer of oil and was country is expected to become a significant gas exporter producing far more oil than it consumed, but its natural gas following the development of the Shah Deniz natural gas production in 2005 was still significantly below its consumption deposit, which is considered to be one of the world’s largest (table 10). The country was increasing its steel products natural gas field discoveries of the past 20 years. According to production at the Baku Steel company, which was a privately BP (the project operator), Shah Deniz has potential recoverable owned company that produced steel products from steel scrap.
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