TBY talks to Sarkhan Babayev, Director of Det.Al Holding, on its aluminum output, the local metals industry, and opportunities for foreign investors.
TBY What is Det.Al Holding’s background?
SARKHAN BABAYEV Det.Al Holding is a foreign company using advanced technology and operating in the mining of iron ore and alunite. It is a leader in non-ferrous and ferrous metallurgy, the processing of iron ore concentrate, and the production of pellets, DRI, steel, aluminum, and primary aluminum. Being an investment company, Det.Al Holding has a track record of investments and successful cooperation with several industrial enterprises.
As of today, Det.Al Holding has subsidiary companies in the sphere of iron ore, alunite, aluminum, and steel production. Dashkesan Filizsaflashdirma, an iron ore company that started producing concentrated iron ore from 2010, is also exporting to foreign markets. Other divisions of our holding are Det.Al Steel and Det.Al Aluminum, which is successfully constructing an aluminum producing smelter in the city of Ganja. Det.Al Holding has also laid the foundation of the Integrated Steel Complex in Azerbaijan, including the design and construction of an iron ore concentration plant with a capacity of 2 million tons per year, a pellet plant with capacity for 2 million tons per year, a direct reduction plant with capacity for 1.1 million tons per year, and a steelmaking plant with capacity for 1 million tons a year. We are committed to the development of Azerbaijan, and currently Det.Al Holding provides around 4,000 jobs.
What are your current expectations for output at the aluminum smelter in Ganja?
Phase I of the greenfield Ganja Aluminum Smelter, which will have an annual capacity of 50,000 tons of primary aluminum, began in October 2011, and the completion of Phase II with the same capacity is expected in late 2012. The smelter plant meets the highest technological, environmental, and quality standards, and by the end of the year about 500 people will be working there.
The new aluminum smelter plant is located within Det.Al Aluminum’s aluminum factory complex, where we are constructing a semi-fabrication plant as well. The new complex will produce 50,000 tons of high-quality primary aluminum of the A-7 type and 50,000 tons of aluminum coiled sheets annually. We expect to finish both Phase II of the smelter plant and the pre-fabrication plant by 2014, and Ganja Aluminum Plant will supply the main raw materials for the complex. The available established infrastructure gives us an opportunity to increase annual production to 200,000 tons in the future after additional investment. This new complex will also add annual production capacity to Azerbaijan Aluminum’s smelter in Sumgait, which currently produces 60,000 tons of primary aluminum per year, and Ganja Aluminum Refinery, which produces 450,000 tons of metallurgical grade aluminum.
How would you assess domestic aluminum production and demand?
Over the last few years, we have been implementing projects to increase the country’s production capacity due to the high demand for aluminum in neighboring countries. As an example, the main market is Turkey, where we are in negotiations with important traders.
However, we cannot forget about the European market, as it is another important destination for Azerbaijan’s aluminum production. At the same time, demand in Azerbaijan is increasing and for now we expect that about 30% to 35% of our production will cover local demand and the rest will go to foreign markets.
How has Det.Al Holding contributed to the rebirth of Azerbaijan’s metal industry?
Det.Al Holding is the main aluminum company in Azerbaijan, producing and exporting high quantities of aluminum from our refinery and other semi-fabricated products. We have boosted the country’s capacity over the years through the construction of industrial complexes and related infrastructure. At the same time, Det.Al Holding is one of the main steel producers in Azerbaijan from iron ore, and we currently have 300 million tons of approved reserves of iron ore. Also, in the last few years we have introduced the latest technology to the production chain, and we are currently implementing measures to rehabilitate our reserves, improve facilities, and increase the capacity and quality of our products. We are also working on the construction of a new pelletization factory in Ganja, which is one of the major projects in this segment, with a concentrated production capacity of 1.2 million tons a year. It will be fully completed by 2016.
What is your outlook for the ferrous and non-ferrous metals industry in 2012 onward?
This is a very attractive industry for foreign investors at the moment, because the government is creating incentives and favorable conditions for potential companies to develop their activities in the country. Also, Azerbaijan holds huge potential in the mining sector and in the ferrous and non-ferrous metals industry. Therefore, I can see many foreign investors looking toward Azerbaijan in the next few years. In this regard, Det.Al Holding is also working on attracting FDI for all of its industrial projects in the aluminum and steel segments, and we have seen a high level of interest in our ongoing projects.
What other economic advantages does Azerbaijan offer to foreign investors?
Today, Azerbaijan’s business environment is very safe. It has seen consistent economic development, favorable legislation, and political and financial stability. Azerbaijan offers better investment opportunities when compared to other countries in the Caucasus, and also when compared to Central Asia and most other CIS countries. In addition to this, there are major infrastructure projects being implemented at the moment, and such projects will strengthen Azerbaijan’s position at the international level.
© The Business Year