Bentonite production in Azerbaijan became unprofitable

Excessive increase in export of railway tariffs led to unprofitable activities of enterprises in mining and processing of bentonite clay in Azerbaijan. Prior to this, the company worked with a meager profit.

In late 2013 the state JSC Azerbaijan Railways raised without any justification or explanation railway tariffs for the country to third. As a result, the cost of transporting one ton of bentonite powder increased from 15 to 22 manat. The share of transport costs in the cost of production exceeded 15 %, Turan said deputy chairman of the Azerbaijani- Russian Ltd. AzRosPromInvest, chairman of the board Dash Salahli Bentonit Arif Rahimov.

"Once the income from exports was about 5 manats per 1 ton, but now it has dropped to 1.8 manats. Taking into account administrative and other costs production became almost unprofitable business," he said.

Bentonite powder is used in many fields of industry and construction, cosmetology, etc. Azerbaijani bentonite is exported mainly to Russia. The world market is dominated by bentonite clay suppliers from Greece and India.

"After raising rail fares, but also because of the volatility of the ruble, the Azerbaijani bentonite has become not competitive," said the representative of Dash Salahli Bentonit.

In 2012, the Company successfully repelled AzRosPromInvest 290,000 net profit, and last year the joint venture faced losses in the amount of 455,000 manat. While in the past and previous years the company exported approximately the same amount of production - more than 50 000 tonnes.

Russian co-founder (Bentonite Company Ltd.), this company has invested on the organization of production, the production of bentonite powder and granules in the field Dash Salahli Gazakh district about $ 26 million.

In 2008, the plant started the production of high-quality bentonite powder used to make molding compounds, drilling fluids and other areas of industry and agriculture. Production facilities can produce over 370,000 tons of bentonite products per year, including bentonite clay for mining and processing plants - 270 000 tonnes, bentonite mud powder - 80,000 tons and granulated clay for bentonite special products - 20 000 tons.

Azerbaijani bentonite is mainly purchased for metallurgy and molding plants in Russia (83 996.6 tons, $ 6 131.8) and Belarus (2 859.8 tons, $ 584.800). Sales in the country are approximately 2-3%. In Azerbaijan bentonite powder is bought by road construction companies (JSC EVRASCON, LLC Korpu Bina Tikinti). These raw materials are asphalt reduces humidity and improves its quality durability.

In 2012, Azerbaijan exported 144,600 tons of bentonite products. The goods were sold at an average price $ 79.3 per 1 ton. And last year, exports fell to 86,900 tons. In this case the contract value of the goods also fell by $ 2 (2.6%). Foreign exchange earnings from the sale of products in 2012-2013 amounted to $ 18.2 million

"The government declared the"Year of the industry", but our company has a major problem that can negatively affect the next years," said Arif Rahimov. - 08B-