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Akbar Novruz

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Over recent quarters, Azerbaijan experienced a dramatic surge in total import statistics (often growing exponentially). Public and market analysis attributed a significant portion of this spike to gold imports by the State Oil Fund of the Republic of Azerbaijan (SOFAZ), which actively expanded its physical gold holdings as a reserve strategy. In H1 2026 trade data, Azerbaijan reported $202.2 million in primary non-oil gold exports, a prominent spike alongside raw copper concentrate ($135.9M) and aluminum products ($58.9M).

However, there is a footnote in Azerbaijan's official H1 2026 trade report that most analysts skip over, and all of them should read.

Produced by the Centre for Analysis of Economic Reforms and Communication, the statistics on non-oil exports come with a little footnote next to gold: "excluding monetary gold." Three little words that differentiate two very different narratives of what is taking place in Azerbaijan’s balance of payments accounts, and how the confusion between the two leads to exactly wrong conclusions. The narrative that has been doing the rounds in financial commentary, namely, that the increase in Azerbaijan’s imports is a result of SOFAZ's acquisition of gold, and that the export data is the mirror image of it, is not supported by the data. The narrative supported by the data is much more fascinating and robust: a domestic mining industry, led by Anglo Asian Mining and AzerGold, has seen a substantial increase in production, and the data in the balance of payments accounts is nothing but a tangible outcome of drill holes in the mountains of Gadabay.

(*the image has been translated by AI)

The balance of payments approach used by the International Monetary Fund makes an absolute distinction between monetary gold and non-monetary gold. Monetary gold is the gold that is kept as an asset reserve in the central bank and in sovereign wealth funds – and SOFAZ's purchases of gold reserves are one example of such. These transactions do not go to the current account but to the financial account of the balance of payments. Non-monetary gold is the gold that is extracted from the earth, smelted, and sold on the international gold markets and to refiners. This is the type of gold that is recorded in the trade statistics of Azerbaijan. The amount of $202.2 million in gold exports in the first half of 2026 has nothing whatsoever to do with the reserve accumulation policies of SOFAZ – it relates to completely different accounting categories.

Who is doing the mining, and from where?

The gold export figure is directly traceable to two operators whose production trajectories explain the numbers. Anglo Asian Mining PLC, the AIM-listed UK producer, has been operating in Azerbaijan's contract areas since the mid-2000s and has been expanding capacity at its Gadabay and Gosha fields. The firm mines gold and copper ores, which then go through a hydrometallurgical processing factory, and the obtained metal alloy of gold and silver called "gold dore" is exported to Swiss refineries. AzerGold CJSC is a government mining company that works in the Chovdar mine and several other extraction sites.

It is the copper metal whose production and export indicate an expansion within the system and not a single project boom in revenues. The amount of copper ore and concentrates exported grew from $12.3 million in H1 2025 to $135.9 million in H1 2026; an eleven-fold rise in revenues that cannot be attributed solely to price change. The prices of international copper grew by about 8%-12% over the same period, meaning that a similar rise in revenues can occur if there were a ten-fold increase in volumes. Indeed, this is true since there is an increase in production volume due to extraction capacities and polymetallic deposits made economically profitable by increased international copper prices.

As regards to the confusion that could emerge between SOFAZ's reserve operations and the commercial mining export figures is understandable given the timing. According to the report of SOFAZ for the first half of 2026, the amount of gold in the portfolio is 178 tonnes (accounting for about 31% of the total value of the fund), as a result of 22 tonnes sold in Q1 2026 through a portfolio rebalance but not due to a strategic decision to abandon this asset class. When SOFAZ purchases gold in the international market, this transaction will be registered in the capital import section of the country's balance of payments, leading to the unusually high number of imports, which is explained above. However, the capital movement is not connected with the gold export in any way, as the latter occurs in the framework of trade statistics.

Broader implications

When taken into consideration as a whole, the figures for gold, copper, and aluminum have a deeper meaning other than the boom in commodity prices. Azerbaijan has always relied on agricultural produce like fruits, vegetables, and cotton as the main commodities in its non-oil export program, while mining of minerals has taken second place. The H1 2026 figures indicate that this might be changing. With a total sum of $397 million earned by gold, copper, and aluminum within six months, it can be said that mining is emerging as a major contributor to non-oil exports.

There is also the geographic aspect of the mining development, which ties in with the overall reconstruction strategy. Among the portfolio of the contract area held by Anglo Asian Mining are deposits in areas bordering on the liberated territories, while AzerGold's Chovdar deposit forms a part of the broader geological exploration program which includes the geology of Karabakh. With further development of the liberated territories and geological surveying of inaccessible territories becoming possible, there is no doubt that the role of the mining sector in terms of non-oil exports will continue to grow in 2027 and 2028 despite price dynamics in the commodity market.