Azernews.Az

Qabil Ashirov

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Azerbaijan’s latest discussions with China’s Xinjiang Joinworld Co., Ltd. should be viewed as more than an effort to expand aluminum production. The country already has an established aluminum industry and, through Azeraluminium, remains the South Caucasus’ only producer of primary aluminum. The real opportunity lies beyond simply producing more metal. It is about using foreign technology, investment and expertise to take Azerbaijan’s aluminum industry to the next level, transforming existing industrial capacity into higher-value production and positioning the country further up the global industrial value chain.

This is what makes the recent Azerbaijan-China talks particularly interesting. Economy Minister Mikayil Jabbarov said discussions with Xinjiang Joinworld focused on joint projects, modern technologies, innovative solutions, know-how and the transfer of expertise. The company specializes in aluminum and metallurgical technologies. The discussions therefore appear to be about expanding industrial capabilities rather than simply creating another source of basic aluminum production.

That distinction matters for Azerbaijan’s economic strategy. Producing primary aluminum is valuable, but the greatest economic opportunity comes when raw or semi-processed materials are transformed into products with substantially higher added value. Aluminum sheets, rolled products, profiles, components and specialized alloys can generate considerably more industrial value than exporting basic metal alone.

Azerbaijan already has a foundation on which such an expansion can be built. Azeraluminium is the country’s primary aluminum producer, while previous modernization plans have targeted increased production capacity and the development of rolled aluminum products. Earlier cooperation with German technology partners also envisaged major investments in expanding aluminum production and processing capacity.

The emerging cooperation with Chinese companies should therefore be viewed as part of a broader industrial transformation. In January, Azerbaijan also held discussions with Chinese companies Wanji and Sunstone about potential joint projects in aluminum production. Sunstone, for example, specializes in carbon materials used in the aluminum industry. This indicates that Azerbaijan is exploring cooperation with different parts of the Chinese industrial ecosystem rather than focusing on a single investment project.

For Azerbaijan, the potential benefit is not limited to foreign capital. Technology may be even more important. Modern metallurgical production requires sophisticated equipment, process management, energy efficiency, automation and continuous technological upgrading. Partnerships with experienced international companies can shorten the time required to develop these capabilities domestically.

There is also an important export dimension. Azerbaijan has already demonstrated that aluminum can be a significant non-oil export product. In January-November 2022, the country exported more than 40,500 tons of aluminum worth $114 million. More recently, Azerbaijan has been seeking to increase production and shift toward higher-value processed products.

This strategy fits Azerbaijan’s broader effort to diversify its economy. The objective is not necessarily to replace the country’s energy sector, but to use existing advantages in energy, infrastructure, logistics and industrial policy to create new sources of export revenue.

Energy is particularly relevant. Aluminum production is energy-intensive, and Azerbaijan’s energy resources and infrastructure can provide an important competitive advantage. If energy can be converted into industrial products rather than being exported only in raw or primary forms, the country can capture a greater share of the value created along the production chain.

Location adds another advantage. Azerbaijan sits along the Middle Corridor linking China with Europe. A competitive aluminum-processing industry could therefore serve not only the domestic market but also regional markets in Türkiye, Central Asia and Europe. The combination of industrial production and logistics connectivity could make Azerbaijan more attractive as a regional manufacturing platform.

The development of the Western Industrial Park also points in this direction. Azerbaijan has increasingly emphasized deeper processing, stronger links between raw-material extraction and manufacturing, and the development of high-value-added metal products. These priorities suggest that metallurgy is being considered as a broader industrial ecosystem rather than a collection of individual factories.

There is, however, an important difference between discussing cooperation and delivering a project. The latest talks with Xinjiang Joinworld do not yet provide details on investment size, production capacity, ownership structure or construction timelines. The real economic significance will become clearer only if the discussions lead to a concrete joint venture, financing agreement and defined production plan.

If that happens, the strategic value could be substantial. Azerbaijan would not simply be producing more aluminum; it could be developing a deeper industrial chain around aluminum and metallurgy, attracting technology, creating skilled employment, expanding non-oil exports and strengthening its position as a manufacturing and logistics hub between Asia and Europe.

The real opportunity, therefore, is not to ask why Azerbaijan needs China if Azerbaijan already produces aluminum. The better question is how Azerbaijan can combine its existing industrial base with international technology and investment to produce better, more sophisticated and more valuable products. That is where the next stage of the country’s aluminum story may lie.