Baku, Azerbaijan, April 1 / Trend /
Ellada Khankishiyeva, Trend Analytical Centre head
Compared to the data of 17 months ago when gold on commodity markets was worth $1,923.10 per troy ounce, today we can state that gold has dropped in price. The price of gold in the precious metals market totalled $1,597.5 per ounce at the end of the week.
This bothers Azerbaijan which only began to accumulate its reserves in gold both through its own and foreign gold which is acquired by the State Oil Fund on the London market of precious metals. It should also be noted that the revival of the gold mining industry of Azerbaijan was precisely due to the increase in world gold prices making gold deposits of the country attractive and profitable to foreign investors.
However, putting aside the eventful fall in the gold price and related factors such as reduced fears about the collapse of the Eurozone, the U.S. economic recovery and therefore, the increasing value of the dollar, it is still too early to talk about the loss of interest in gold. On the contrary, the instability of the above factors (the recent banking crisis in Cyprus is a good example) shows that gold as a reliable asset will retain its status for a long time which is quite profitable for gold mining countries, including Azerbaijan.
There is much evidence of the possibility of the gold price falling only to the upper limit of the lowest level. This meant in 2012, the world's central banks comprising mostly the developing countries purchased 535 tons of gold which was the highest level since 1964. It is expected that this pattern will be repeated in 2013, as more and more banks will diversify their reserves by increasing the share of investments in gold.
It is known that the main buyer of gold on world markets in 2012 was China, which is why this country has moved into first place as the largest consumer of gold in the world, pushing India to second place. Only the factor of development and growth of consumption in China, when the demand for gold will rise rapidly, suggests that the price of the yellow metal will not fall down.
Respected analysts expect an upward trend in the gold price in the coming years, although, in contrast to previous predictions, the pace of price growth has declined. In particular, BofA Merrill Lynch analysts said the market will reach the target mark of $2000 per ounce no earlier than 2014.
Consequently, the gold mining industry of Azerbaijan, as a young branch of the economy has a promising future. According to official estimates, Azerbaijan forecasts an annual increase in gold production in the range of one per cent until 2017. Gold production in 2013 is expected to reach 1,810.7 kilograms, in 2014 - 1,828.8 kilograms, in 2015 - 1,847.1 kilograms and in 2016 - 1,865.5 kilograms.
This means the Azerbaijani gold mining company Anglo-Asian Mining PLC plans to double its gold production in the country by 2015 through the Gosha field. As research showed, in contrast to the Gedabey field which is a copper deposit with gold, Gosha is a gold mine. The company has been producing gold from the Gedabey field since 2009 and plans to begin production on the Gosha field in 2013.
The second largest gold producer in Azerbaijan, the International Mineral Resources Operating Company AIMROC, issued the first bar of gold from the Chovdar mining deposit at the end of last year and plans to reach full production this year. The company's plant for heap leaching of gold which can handle all the ore projected for production will also start functioning at full capacity.