Beijing’s quiet yet strategic economic expansion is leaving a growing mark across Eurasia, and now its influence has reached Dashkasan, a mountainous region in western Azerbaijan rich in iron ore deposits. Recent high-level discussions between China’s Sinosure and Sinosteel and Azerbaijan’s AzerGold CJSC, Dashkasan Iron Ore LLC (DDF), and Azerbaijan Metal Company signal a pivotal shift in the region’s industrial landscape. Though these talks received limited international media attention, they reflect a deep alignment between Azerbaijan’s industrial modernization ambitions and China’s Belt and Road Initiative (BRI).
Azerbaijan’s Drive Toward Industrial Diversification
The Dashkasan project represents a major step in Azerbaijan’s efforts to diversify its economy, historically dominated by oil and gas exports. Plans are underway to establish a large-scale hot-briquetted iron (HBI) plant in Shamkir District, targeting annual production of two million tons of HBI. When operational, this facility could become one of the most technologically advanced metallurgical plants in the South Caucasus.
Since 2020, Azerbaijan’s leadership has expanded AzerGold’s mandate from gold mining to managing and developing ferrous metal deposits. The establishment of Dashkasan Iron Ore LLC (DDF) marked a turning point in Azerbaijan’s industrial policy, with state-backed investment supporting geological surveys that confirmed 187 million tonnes of iron ore reserves—enough for at least 15 years of production.
China’s Strategic Role: Financing, Technology, and Industrial Diplomacy
China’s involvement combines financial backing, technical expertise, and long-term industrial strategy. Sinosure, China’s state export credit agency, provides financing and risk management, enabling Chinese firms to enter complex or high-risk projects abroad. Meanwhile, Sinosteel, now part of the Baowu Group, brings decades of experience in iron ore processing and steelmaking, ensuring the transfer of advanced metallurgical technologies to Azerbaijan.
Unlike Western aid models, Beijing’s approach does not impose political or ideological conditions. Instead, it emphasizes practical industrial cooperation—financial support, technical know-how, and integration into a global industrial ecosystem—making it appealing for nations like Azerbaijan that prioritize sovereignty in decision-making.
Creating a High-Value Metallurgical Ecosystem
The Dashkasan project is designed as a vertically integrated metallurgical operation rather than a simple raw ore export venture. With relatively low-grade iron ore averaging 40% content and limited maritime access, Azerbaijan aims to produce higher-value products domestically. The production chain involves three stages:
-
Concentrate production with 67% iron content
-
Pellet production
-
Hot-briquetted iron (HBI) manufacturing
This approach maximizes value addition, enhances export potential, and aligns with global trends in decarbonization, as the plant will use direct reduction technology—a cleaner, energy-efficient process that converts iron ore into pure iron using natural gas instead of coal.
Strategic Partnerships and Regional Impact
The project leverages multinational cooperation:
-
Kazakhstan: Fonte GreenMet Investments Fund partnered with Azerbaijan Metal Company LLC to finance, construct, and manage the HBI plant.
-
China: Provides industrial expertise and financing support through Sinosteel and Sinosure.
With an estimated $1.2 billion investment and over 4,000 jobs during construction and operation, Dashkasan is poised to generate significant economic impact, potentially contributing $13 billion in revenue to Azerbaijan’s budget over its lifecycle. The initiative also drives growth across logistics, infrastructure, technology transfer, and workforce development.
Geopolitical Implications
Dashkasan underscores China’s increasing engagement in the South Caucasus—a region traditionally influenced by Russia, Western powers, and Türkiye. By investing in long-term industrial capacity rather than short-term resource extraction, China positions itself as a neutral economic partner while expanding its Belt and Road footprint. For Azerbaijan, the partnership diversifies international ties and reduces dependence on a single geopolitical actor.
The project reflects a broader evolution of the Belt and Road Initiative, emphasizing industrial development, renewable energy integration, green metallurgy, and high-tech material production.
Challenges and Opportunities
Despite strong prospects, Dashkasan faces challenges, including infrastructure bottlenecks, environmental standards, and commodity price fluctuations. Yet the project’s design—integrating multiple partners, sustainable technologies, and shared economic objectives—provides a strong foundation for long-term success.
Ultimately, Dashkasan represents more than a mining project; it symbolizes Azerbaijan’s entry into a new industrial era. By converting raw resources into high-value products, the country is positioning itself as a regional industrial leader while fostering technological modernization and economic sovereignty. For China, Dashkasan is another link in its global network of resource cooperation, exemplifying how the Belt and Road Initiative continues to reshape Eurasia’s industrial map.
