THE MINERAL INDUSTRIES OF 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 Armenia had a large industrial minerals industry and was the in December 1991 by republics of the former Soviet Union largest producer of perlite in the FSU. It produced a number of (FSU). In the adopted declaration, the participants of the other industrial minerals, including clays, diatomite, dimension Commonwealth declared that their interaction would be based stone, limestone, salt, and semiprecious stones, and had a on the principles that all member states have sovereign equality diamond-cutting industry. Armenia, however, had practically and are independent and equal subjects under international law. no mineral fuel production. The CIS is not a state and it does not have supranational powers Azerbaijan’s most significant reserves in terms of value were (Executive Committee of the Commonwealth of Independent its oil reserves located offshore in the Caspian Sea. A large States, 2001, Commonwealth of Independent States, accessed number of major foreign firms were involved in projects to June 25, 2001, at URL http://www.cis.minsk.by/english/ develop these reserves. Azerbaijan was also a producer of engl_cis.html). In 2000, the members of the CIS were Armenia, alunite, alumina, aluminum, copper-molybdenum ore, iron ore, Azerbaijan, Belarus, Georgia, Kazakhstan, Kyrgyzstan, and lead-zinc ore. The country produced many industrial Moldova, Russia, Tajikistan, Turkmenistan, Ukraine, and minerals, the most important being bromine, clays, gypsum, Uzbekistan. iodine, limestone, marble, sand and gravel, decorative building In September 1993, the CIS states signed an agreement on the stone, and precious and semiprecious stones. creation of an economic union “to form common economic Georgia had been a major producer of manganese from the space grounded on free movement of goods, services, labor Chiatura deposit during the Soviet period, but production force, capital; to elaborate coordinated monetary, tax, price, subsequently had fallen precipitously. The manganese was used customs, external economic policy; to bring together methods of domestically for ferroalloy production at the Zestafoni regulating economic activity and create favorable conditions for ferroalloys plant. A small amount of iron ore also was mined, the development of direct production relations” (Interstate and the Madneuli complex, a copper-barite polymetallic deposit, Statistical Committee of the Commonwealth of Independent was exploited for barite, copper, and a range of byproduct States, [undated], About Commonwealth of Independent States, minerals that included gold and silver. Lead and zinc were accessed June 25, 2000, at URL http://www.cisstat.com/eng/ mined at the Kvaisi lead-zinc deposit, and arsenic was mined cis.htm). from the Lukhumi and the Tsansa deposits. The steel mill in In 2000, all the countries of the CIS reported an increase (in Rustavi had the capacity to produce 1.4 million metric tons per constant prices) in their gross domestic products (GDP) and in year (Mt/yr) of crude steel as well as the capacity to produce industrial output in comparison with those of 1999, with the coke, pig iron, sinter, rolled products, and tubes and pipes exception of Turkmenistan for which there was no reporting (Metal Bulletin Books Ltd., 1997, p. 131). (table 3). Georgia produced a range of industrial minerals that included bentonite, diatomite, talc, and zeolites and also mined Armenia, Azerbaijan, Georgia, and Turkmenistan semiprecious stones. Decorative stones for use as building (Caucasus and Caspian Littoral Countries ) materials were mined at more than 100 deposits (Georgian Investment Center, 1998, Overview of the economic sectors of The countries of this region were producers of a number of Georgia—Mining, accessed July 2, 1998, at URL metallic and industrial minerals. Armenia had been mining one- http://www.georgia.net.ge/gic/Sector/Mining.HTM). Many clay third of the FSU’s output of molybdenum. It also mined deposits as well as high-quality quartz sand and sand and gravel copper, copper-zinc, and native gold deposits. Significant deposits also were developed for the production of bricks and byproduct constituents in the country’s nonferrous ores include ceramic products. The country produced some coal and crude barite, gold, lead, rhenium, selenium, silver, tellurium, and zinc. oil and had an oil refinery at Batumi. Extraction of natural gas THE MINERAL INDUSTRY OF THE COMMONWEALTH OF INDEPENDENT STATES—2000 3.1 ceased in 1997. resources. Following the collapse of the Soviet Union and the Turkmenistan was a leading producer of natural gas, and establishment of Azerbaijan, Kazakhstan, Russia, and more than 90% of foreign direct investment went into the Turkmenistan as independent states, the question of ownership country’s oil and natural gas sectors. Investment, however, has and development rights in the sea has remained unresolved. No slowed in the past few years owing to the restrictive conditions agreed-upon convention exits that delineates the littoral states’ that Turkmenistan has attached to foreign investment. ownership of the sea’s resources or their development rights. Turkmenistan, however, was moving to attract additional Several conflicts have arisen over claims to regions of the sea. foreign investment in order to develop its vast oil and gas Disputes exist concerning whether the resources in the Caspian resources (U.S. Energy Information Administration, June 2001, should be shared in common by all littoral states or if the Country analysis briefs—Turkmenistan, accessed October 25, Caspian Sea should be divided into national sectors. 2001, at URL http://www.eia.doe/gov/emu/cabs/turkmen.html). Negotiations between the littoral states have made slow Turkmenistan has a wide variety of industrial mineral progress resolving differences. Azerbaijan, Kazakhstan, and resources, which include bromine, iodine, salt, sodium sulfate, Russia had agreed on dividing the sea by a “modified median” and sulfur. The Garabogaz Aylagy lagoon off the Caspian Sea principle, Iran had insisted on an equal division of the sea, and was one of the world’s largest sources of raw materials for the Turkmenistan’s position was evolving. chemical industry; commercial interest in the salts of this region Division into national sectors has been the de facto solution. began at the end of the 19th century (Weisman and McIlveen, However, disputes have arisen over the delineation of these 1983, p. 1214-1215). Production from the Garabogaz Aylagy national sectors. For example, Turkmenistan and Azerbaijan had accounted for almost 45% of the FSU’s sodium sulfate are disputing ownership of a field called Serdar by production and all of its production of epsomite and medicinal Turkmenistan and Kyapaz by Azerbaijan. Azerbaijan protested Glauber’s salt (Aganbegyan and Ovezgel’byev, 1998, p. 97). Iran’s decision to award Royal Dutch/Shell Group and Lasmo The countries of the Caspian Sea region were of greatest Oil Ltd. a license to conduct seismic surveys in a region that importance to world energy markets owing to the large oil and Azerbaijan considers part of its territory. Turkmenistan claims gas reserves in this region that were beginning to be fully that portions of the Azeri and Chirag fields, which Azerbaijan developed. These resources have created competition between calls Khazar and Osman, respectively, lie within its territorial countries concerning their ownership, among companies to get waters rather than Azerbaijan’s. Turkmenistan, furthermore, development rights, and among countries to establish export has insisted that development of the Azeri and Chirag fields, routes. The area of the Caspian Sea, which was bordered by which is being carried out by Azerbaijan International four CIS states (Azerbaijan, Kazakhstan, Turkmenistan, and Operating Co. (AIOC), be stopped. Russia) and Iran, was developing into a significant oil- and gas- Nevertheless, countries are engaged in active exploration and exporting area. The Caucasus countries of the CIS (Armenia, development programs in what they considered to be their Azerbaijan, and Georgia) were potentially major world oil sectors of the Caspian Sea. Azerbaijan and Kazakhstan, in transport centers. Proven oil reserves for the entire Caspian Sea particular, in conjunction with foreign firms, have made region [estimated to be between 18 billion barrels (Gbbl) and 35 progress in offshore oil development. Gbbl] were comparable with those of the United States (22 Another major area of controversy that has significant Gbbl) and greater than those in the North Sea (17 Gbbl)]; economic, environmental, and geopolitical ramifications undiscovered oil resources could yield another 235 Gbbl of oil. involves the proposed routing of pipelines to export The majority of Azerbaijan’s oil resources are offshore, and hydrocarbons from this region. The issues involved the degree apparently 30% to 40% of Kazakhstan’s and Turkmenistan’s that Russia should control export routes by having them pass total oil resources also are offshore (U.S. Energy Information through its territory, the intent of countries to avoid routing Administration, August 2000, World energy areas to watch, pipelines through such potentially unfriendly countries as Iran accessed August 3, 2001, at URL http://www.eia.doe.gov/emeu/