Gold: made in Azerbaijan
Azerbaijan is seriously engaged in gold mining in its own deposits, and plans in 2012 to almost double the commercial production of gold. Proven gold reserves of Azerbaijan will increase gold production from 4.5 to 7.5 tons this year.
It should be noted that industrial gold mining in Azerbaijan began in May 2009 and only on one deposit, namely Gedabek, but it helped the country become one of the gold-mining countries. The volume of production in this deposit in 2011 totaled 57,068 ounces of gold.
And construction on this deposit of agitation leaching plant will several times increase production volumes of precious metals. Thus, the Anglo Asian Mining plc, a manufacturer of gold in Azerbaijan, decided to build on the Gedabek gold and copper deposit a plant that will to process high grade ore and additional resources that are not suitable for the current heap leaching processing operation, together with spent ore from the leach heaps to further improve total gold recoveries. The agitation leaching technology allows to extract more than 90 percent of the gold contained in ore, whereas for heap leaching, the figure is about 70 percent. The company believes that gold production at Gedabek will justify investment in a new agitation leaching plant.
At the same time, Azerbaijan has already completed construction of gold processing plant, which will allow production of pure gold of Azerbaijani production. At present, after the initial processing, gold, extracted from the Azerbaijani deposits, is sent to the factory in Switzerland for complete processing.
Construction in Azerbaijan of such a plant will also justify the investments, as the Geological Service of the Ministry of Ecology of Azerbaijan found along with a number of known, new deposits with unique in terms of gold reserves (more than one hundred tons) in Nakhchivan, Goygol, Dashkesen and other regions. This confirms the production potential and value of the country as the owner of one of the main natural resources.
Positive impact on the beginning of the gold mining industry in Azerbaijan has the growth in world gold prices, resulting in gold production in Azerbaijan has adopted a cost-effective nature. If you look at the dynamics of the gold price over the past 11 years, from 2000 to 2011 the price of gold has risen from $281 to $1,572, that is, the growth of asset value amounted to 560 percent. Such gains were not given by any asset. This gave the gold status of "saving harbor" in times of global economic crisis and increased its protective function in times of inflation and a falling dollar in the world.
The trend of getting rid of currency in favor of gold during the financial crisis was observed in every prosperous country, but with the revival of the global economy it has become not so important, because gold is a passive currency that does not attract investors.
Although Azerbaijan has streamlined the structure of its currency reserves long before the global financial crisis, but also initiated the formation of gold-exchange reserves. However, gold reserves in the country are not significant as they are formed mainly at the expense of its own production units and those that fall to the country.
Since the start of gold production in Azerbaijan the country's share in the amount of 513.6 kilograms of gold was deposited to the Central Bank of Azerbaijan. Its market value is $28.4 million.
State Oil Fund of Azerbaijan (SOFAZ) also began to invest in gold this year in order to diversify the investment portfolio. SOFAZ purchased more than 2.8 tons of gold (90,143 ounces) in the first quarter of 2012. Up to 5 percent of the total investment portfolio may be invested in gold in 2012 in accordance with the State Oil Fund's investment strategy approved by the President of Azerbaijan Ilham Aliyev on December 29, 2011. Since February of this year SOFAR started investing in gold bullion of the banks that are market-makers - members of the London Bullion Market Association.
At present, Azerbaijan is carrying out gold mining from only one deposit - Gedabek. However exploration work on Gosha deposit was completed in Tovuz region in 2011, and the Ministry of Ecology and Natural Resources has approved a program of Anglo Asian Mining plc for the development and production at this deposit. The reserves of the deposit are estimated between 10,000 and 15,000 ounces of gold per year over five years. Anglo Asian Mining plc also discovered a rich deposit of gold in the mines of Ordubad, which will be third operating deposit in the future.
The Anglo Asian Mining Company has the rights to develop six deposits in the south-west of Azerbaijan - Gedabek, Ordubad, Gosha Bulag, Gyzyl Bulag, Vezhnali and Soyutlu based on a PSA type agreement signed in August 1997 with Azerbaijani government. Under the contract, production of about 400 tons of gold, 2500 tons of silver and 1.5 million tons of copper is planned at the deposit.
One more consortium has a contract for the production of gold in Azerbaijan - Azerbaijan Nternational Mineral Resources Orerating Co., Ltd. This agreement was signed between the Azerbaijani government and the companies Londex Resources SA, Willy & Meyris SA, Fargate Mining Corporation, Globex International LLP and Mitsui Mineral Development Engineering Co. Ltd. on December 30, 2006. . The contract provides the exploration and development of Garadagh, Chovdar, Geydag, Dagkesaman ore-bearing areas, Kehnemedan area and Kurekchay field.
Currently preliminary work in connection with the start of operation and construction of the plant is being implemented at Chovdar gold mine, located in Dashkesan region. Industrial stocks at this deposit amount to 44.61 tons of gold and 164.25 tons of silver.
Biofuel in Azerbaijan: Interests and difficulties
A growing number of large companies are investing in bioprocessing enterprises. This industry has massive potential in creating new markets, ensuring energy security, developing new technologies, and reducing pressure on the environment.
Azerbaijan will also build a complex for electricity generation from biogas, the head of apparatus of the Ministry of Energy and Industry of Azerbaijan, Rasim Mammadov, told reporters on Tuesday.
"The foundation of the complex will be laid in November, construction will last two years," he said. He noted that near the factory a large animal complex will be built, which will provide the factory with raw materials.
But being a young industry, there are technical, commercial and strategic challenges for the wide industrial production of bioproducts in the country. Technical difficulties are, first of all, the
availability of the required amount of feed raw materials, which would be able to meet demand. This can be achieved if to pay attention on such things as plant genomics, breeding programs, the chemical engineering of desirable traits - resistance to drought, cold, and the composition of sugars, improvement of the quality and stability of the enzyme, the establishment of factories for the cultivation of microorganisms, the optimization of technological processing, as well as logistics, given the seasonality of raw materials, biomass briquetting, its storage and transportation. The complexities of a commercial nature are integration into the existing supply chain, finance, and the uncertainty associated with the novelty and non-traditional activities in this sphere.
Bioprocessing companies can be compared with oil refining, but here the raw material is biomass - biological material, composed of living or recently living organisms, which as a result of processing is converted into fuel, energy, chemicals, materials and food. And we should make a reservation that bioproducts in any link of the supply chain from raw material to production is not yet a clear alternative to the petrochemical sector.
However, interest in this new branch from the large business and governments is due, above all, to a number of global risk factors: deteriorating economy of mineral resources, energy and geopolitical security of states, rising public pressure in issues of environmental safety, the increase in demand due to rapid population growth.
Azerbaijan, despite the presence of rich deposits of fossil energy sources will develop alternative energy. This is not an attempt to follow the fashion, but a conscious task, whose aim is sustainable development and conservation of national resources of the country for future generations.
Currency competition in Azerbaijan: euro still inferior
Since late April the euro against the Azerbaijani manat fell by 0.04 points. The dynamics of decline continues to the present. If on April 30, 2012 exchange rate for one euro stood at 1.0415 manat, today the figure stands at 1.0000 manat to the euro.
It is known that unlike the dollar, exchange rate of which to manat is adjusted by the Azerbaijani Central Bank depending on the inflation process in the country, the euro exchange rate is calculated on the basis of cross-rate, and varies depending on the processes in the international currency market. Consequently, the current decline of the euro comes from the disappointing news about the economy in the Eurozone.
First, news from Greece played its role in reducing the cost of the euro, where the talks ended without results on the formation of the ruling coalition and the government of "technocrats" and the holding of new parliamentary elections and the establishment of an interim government were announced. So, for this reason, today the euro against the dollar broke down the psychological mark of $1.27 per euro, and updated the minimum mark for the last four months. Second, considerable importance in the negative behavior of the euro is due to financial problems in Italy, where the international rating agencies lowered the credit rating amid the country's problems with public debt.
At the same time the strengthening of the dollar and rising oil prices on world markets enhance the trend of euro exchange rate's decrease.
2012 already started with a significant depreciation of European currency in the world currency market. The lowest figure for 10 years in Azerbaijan was recorded on January 16, 2012 - 0.9943 manat per euro. Then the situation was also associated with Greece, in particular concerns of investors about the fact that Greece did not receive necessary for repayment of debt obligations money on time and will be forced to default. On the day the euro against the dollar fell to its lowest level in 16 months, and towards the Japanese yen - even to a minimum of the past 11 years.
Noteworthy is the fact that at all times since the beginning of the year a sharp drop of the euro is observed in Azerbaijan in the middle of each month. Thus, in January, falling to the level of 0.9943 manat to the euro, was noted on the 16th, the minimum level of the euro to manat (1.0231) in February was also recorded on 16th. On March 16 euro once again demonstrated the minimum level for the month at around 1.029 manat per euro. Then, having experienced steady April, the euro reached a new minimum level for May on the 16th.
The euro will continue to fall until the tensions over the financial condition of some eurozone countries do not subside. Experts note that in the medium term negative impact of the currency weakening on the threat of default of one of the eurozone countries can have a much more positive effect. Opinions of experts differ on longer-term prospects for the euro. For example, the Central Bank of Azerbaijan said at the beginning of the year that taking into account the processes in the global foreign exchange market, it is almost impossible to make even an approximate prediction of the manat compared to the euro.
In general, sharp weakening of European currency is unprofitable for Azerbaijan, otherwise the competition between the Western and domestic producers will increase on many commodities. Effect of import substitution will be lost, in other words, the inflow of Western goods in the market of the country will increase, leading to excessive competition for domestic producers.
The Government of Azerbaijan for the first time included a forecast of the average annual rate of national currency against the euro in the concept of socio-economic development in 2012. Typically, the budget package fix forecasted average exchange rate of manat against the dollar. Forecasts against the European currency were prepared on a formal basis.
According to the forecasts of the Azerbaijani government, the rate of the manat against the euro in 2012 is expected at the level of 1.0910 manat per one euro against the expected to 1.0939 manat in 2011 (according to the CBA, at year-end exchange rate was 1.0178 manat). Exchange rate is forecasted at 1.0608 manat in 2013, 1.0430 manat in 2014 and 1.0387 manat in 2015.
Rich Iranians lose subsidies
Iran is moving closer to countries that ended energy sector subsidies.
According to the experience of these countries, the population, namely poor people suffer as a result of the transition. The protection of poor people from the consequences of this step is the number one task for the Iranian government.
The Iranian parliament on Tuesday decided to increase the amount of state subsidies to the families in cash or naturally. Thus, the total amount of subsidies paid to the families in the form of the compensation increased from $ 32.6 billion in 2011 to $39.1 billion in
2012. This amount per capita increased from $37 to $60 a month.
Iran has taken measures concerning the targeted social assistance to prevent aggravating the social situation as a result of the elimination of low energy tariffs. These measures have been widely recognized in the world to combat poverty. However, Iran has chosen the scheme as a criterion of needs - a line that separates the poor from the rest, rather than a certain amount, as usual, which consists of the following items. Iranians can not get the targeted social aid, if 5 to 10 percent of their average monthly salary exceeds the amount worth $ 37 (this year - $ 60).
According to the Iranian Statistical Committee, the average monthly wage of an urban resident is about $ 680, rural - $490.
Today, about 74 million Iranians, or nearly 94 percent of Iran's population (78.8 million people in 2012) are social aid recipients.
According to the country's official statistics, in 2008 10 million Iranians live in absolute poverty and 30 million - relative poverty.
The Budget Committee of the Iranian Parliament has recently approved removing 10 million "rich" Iranians from the list of social aid recipients. The Iranian targeted subsidies organization previously sent text messages to the citizens who can live without state support with the request to voluntarily withdraw from the program. Later, a voluntary form of denial will be replaced by forced one.
Therefore, there was the main gap of the system in Iran as a country with a high level of financing, namely social injustice. Not very poor layers of the population get the benefits from subsidies. There is a situation where the poor pay for the rich.
Iran actively stocks up with gold
Iran, in order to preserve capital in anticipation of tougher sanctions, rapidly increases its reserves in gold. Iran's gold reserves were significantly replenished by selling its oil in exchange for gold bullion, and by a significant increase in the volume of imports of gold.
Exports of gold only from Turkey to Iran in March 2012 increased by 36 times, compared to the same month in 2011. According to the Institute of Statistics of Turkey, the total volume of gold exports in the period from January to March 2012 amounted to $1 billion against $411 million during the same period in 2011.
The main importers of gold to Iran, in addition to Turkey, are also Russia and the United Arab Emirates.
In addition, Iran has a lot of its gold deposits, number of which is growing. The deposits with reserves of 16 tons of pure gold were found in April in the province of Kurdistan, which has increased the total stock of gold in the deposits of Iran up to 320 tons. Total reserves of the country in the reserve fund amount to 907 tons valued at over $17.5 billion, Iranian media reported.
Traditionally, gold is used by countries to reserve funds amid political instability and economic crisis, because the exchange rates at this time can vary greatly, and thus lead to large losses as opposed to quotes gold. The gold during the financial crisis has demonstrated not only stability but also growth, which any other asset failed to show.
In particular, Iran, increasing gold reserves, intends this way to ensure its food security, using the gold in the calculations for the imported food. Today Iran has a shortage of grain and rice, and to meet the demand for these products, the IRI is currently paying for their imports from Pakistan, India and China with oil.
Western sanctions against Iran's banking system, its exclusion from the SWIFT payment system, as well as difficulties in the in mutual settlements in national currencies with trading partners pose a threat to Iran's ability to provide itself with essential commodities.
It is known that Iran is waiting for a new phase of EU sanctions, which will come into force from July 2012