Supplying iron ore on the eve of the crisis/ imbalance of energy and mandated currency, how did iron ore fall into the well?

EghtesadOnline: The future of the country's iron ore industry is uncertain. Many challenges, including energy imbalances, exchange rate fluctuations, and lack of infrastructure, have faced this industry with serious threats, so to overcome this crisis, we need to make serious decisions and long-term plans.

In July this year, Keyvan Jafari Tehrani warned about the shortage of iron ore in a report.

According to him, the peak of the iron ore shortage crisis will occur in 14 years, in fact, we will witness this reduction in the next six to seven years, which will reach its peak in 1418.

He added: After the Taliban came to power, we have witnessed the introduction of laws that prohibit the export of raw materials and emphasize the processing of mineral products. did This decision created many problems for the exporters and after long negotiations, these duties were reduced to $100 per ton. Of course, this happened when the price of coal in the world market had reached its peak.Jafari Tehrani explained: The former Deputy Minister of Mines spoke about joint cooperation during his visit to Afghanistan, but the question is raised, what is the guarantee that in the future, in case Iranian companies take iron ore from Ghorian mines, they will be allowed to leave the minerals? Shouldn't heavy duties be imposed on it?


The senior metal market analyst added: Even during the time of Karbasian's management regarding the construction of a processing plant, negotiations were held with the then Minister of Mines and Petroleum of Afghanistan (Dr. Daud Shah Saba) that the processing plant would be located near the Iran-Afghanistan border on Iran's soil, but permission and approval were given. Necessary for it was not issued.He added: If we are going to turn iron ore into concentrate in Afghanistan, they will not accept even concentrate as a processed mineral and demand a product with higher added value such as pellets. On the other hand, what is the benefit of producing pellets in Afghanistan, which lacks sufficient gas resources, and is it economically justified for the country?

In addition, Ali Safaryan, the vice president of the iron ore association, told Ekhtaz Online reporter: Currently, the production and consumption of iron ore in the country is approximately 120 million tons, but due to the increase in demand, it will reach 160 million tons in the future and will be limited. Deposits into deeper mines, it is predicted that we will face a shortage of iron ore.

He added: To compensate for the lack of iron ore, it is necessary to invest and enter countries like Afghanistan and Uzbekistan. In the surrounding countries, by investing in the production of concentrate and pellets, we can help them to increase their production capacity and finally import the iron ore we need from them.Safarian further stated: In order to import iron ore in large volumes, we need to strengthen the port infrastructure and we must provide the possibility of berthing of ships with a capacity of over 400,000 to 500,000 tons so that transportation costs are reduced and imports are economically viable. Otherwise, considering the high costs of sea transportation, importing from some countries may not be economically justified.

The Vice President of the Iron Ore Association added: Afghanistan's market has a high potential for supplying iron ore, and various countries are also interested in this country. However, to attract investors and exploit this capacity, the government must guarantee the security of investment, in which case, We can meet our domestic need for iron ore by increasing investment in Afghanistan.Pointing out that the country's iron ore industry is facing many challenges, he said: Currently, more than 60% of the raw materials of steel factories are supplied by the three large complexes of Chadormello, Golghar and Gehrzamin, but recently the usufruct rights of these mines have increased to 55 The percentage approved by the parliament can lead to the shrinking of these mines and, as a result, the reduction of iron ore production.

Safarian explained: In order to achieve 8% growth in the mining sector, we need large investments, but fundamental weaknesses in the fields of exploration, mining machinery, transportation infrastructure (road and rail) and other related matters are a big obstacle to the realization of this goal. Until these deficiencies are resolved, we cannot achieve significant growth in this sector.He stated that the iron ore industry is less affected by the lack of energy than other industries, and said: the main challenge of the iron ore industry in the field of export is the difference between the production costs based on the free exchange rate and the mandated pricing of products at half the rate, which The huge difference between the buying and selling rates of foreign exchange has greatly reduced the profitability of exports and reduced the motivation of producers to export.

This iron ore industry activist stated: In the last three years, production costs in our mines and factories have increased between 210 and 300 percent, while the selling price of products has grown by only 20 to 30 percent; This significant increase in costs and its disproportion with the increase in sales prices has caused most of the production units to face losses.

He continued: "In order to prevent the aggravation of this situation, the government should immediately and quickly deal with the problems related to the exchange rate and exports, so that by increasing foreign exchange earnings and creating liquidity, it is possible to reinvest in the production sector."

Safarian stated: After the private sector was able to provide the liquidity it needs by using the income from exports, it will spontaneously invest in infrastructure such as electricity and energy. In fact, the private sector and private companies because Personal interests have a greater incentive to invest in these areas and there is no need for the government's order in this regard.

Regarding the trend of iron ore exports in the second half of the year, Safarian added: field investigations show that the export situation has improved in this period, also due to the improvement of export conditions in the first half of the year, as well as the hopes created in the market following the resolution of some currency problems. It is expected that this trend will be positive in the second half of the year.The vice president of the iron ore association explained: The energy imbalance, especially in the electricity and gas fields, has faced the steel industry with a serious challenge; In recent months, many steel production units have been facing gas and electricity cuts for more than 4 to 5 months, which has led to widespread disruptions in production and, as a result, a crisis in the entire steel production chain.

He continued: With the continuation of this process and the increase of discontent, it is expected that next year, the duration of gas outage will increase to 6 to 7 months, and if this crisis is not managed and resolved, the possibility of complete shutdown of many production units in two to three There will be a leading year.He added: In order to deal with this crisis, production units should seriously move towards investing in the energy sector and seek to reduce energy consumption and increase productivity by using new technologies, especially low-consumption technologies, which requires proper financing. and government support.

According to Safarian: In advanced countries, new technologies such as electric trucks and solar energy are used in the mining sector, while fossil fuels such as diesel are still used in our country.He stated: In the past, the cost of energy carriers such as electricity was very low, and for this reason, energy-consuming technologies were easily used in the country, but time and careful planning are needed to update these technologies and reduce energy consumption. Therefore, the government should resolve energy conflicts by formulating a comprehensive plan and then move towards the liberation of energy carriers.

Safarian emphasized: Currently, the only way the government could take to get out of this situation was to resolve the mandated exchange rate, because as long as the exchange rate is double, economic corruption will intensify and economic disharmony will continue. will stayHe added: Many importers are looking for more profit and may end up suffering the fate of Debash tea; In a situation where the exchange rate is double, importers can increase their profit by demanding more currency, as a result, the cost price of the goods for the consumer will also be higher. For example, if a product is purchased at a price of one dollar and enters the country with an exchange rate of two dollars, the final price for the consumer will increase significantly.