Iran Iron Ore Exports Rise 43%

Exports during the fifth fiscal month ending Aug. 22 hit 1.79 million tons, witnessing a staggering rise of 96% compared with last year’s corresponding month, according to the latest report released by the Iranian Mines and Mining Industries Development and Renovation Organization.

The report shows iron ore pellets had the lion’s share in Iran’s iron ore exports in the fifth month under review with 751 tons, making up 42% of total exports. 

Next was iron ore fines/lumps with 548 tons or 30%, followed by iron ore concentrates with 499 tons or 28%, according to Financial Tribune.

Export Tariff

The Ministry of Industries, Mining and Trade has imposed 20-25% duties on the export of unprocessed minerals, including iron ore, effective Sept. 23.

According to Deputy Industries Minister Jafar Sarqeini, the decision is aimed at supporting domestic production, preventing the export of unprocessed minerals and generating more value-added.

The official said exports of iron ore concentrates and pellets will see 25% duties, the Industries Ministry's news service Shata reported.

Iron ore seems to be at the forefront of new restrictive measure, as Iran is facing a shortage of iron ore to feed its steel industries in the near future.

Bahram Soltani, the head of Iranian Steel Producers' Association, said the domestic market should be given priority when it comes to supplying iron ore and only a surplus should be left aside for exports. 

This is while due to the ease of trading and high demand in global markets, Iranian iron ore is sold unprocessed. 

Exports become more lucrative when the value of national currency declines. The rial lost nearly two-thirds of its value over the last Iranian year that ended on March 20, 2019.

IMIDRO chief, Khodadad Gharibpour, raised the possibility of reducing or abolishing duties on the export of raw minerals.

According to Industries, Mining and Trade Minister Reza Rahmani, 10% of Iran's iron ore output are currently exported.

A total of 17 million tons of iron ore were exported from Iran in the last fiscal year (March 2018-19), figures released by the Iranian Mines and Mining Industries Development and Renovation Organization show.

Iron ore in the form of fines/lumps had the lion’s share from exports with 8.84 million tons, followed by iron ore concentrate with 5.52 million tons and iron ore pellet with 2.78 million tons.

IMIDRO data show exports of iron ore concentrate, iron ore fines/lumps and iron ore pellet earned $380.95 million, $258.75 million and $201.92 million respectively, meaning a total of $840 million worth of such products were exported during the period.

According to an Esfahan Steel Company official, Nematollah Mohseni, excessive exports of iron ores have caused many steelmakers, including ESCO, to operate below capacity, IRIB News reported.

Iran was the sixth largest supplier of iron ore to China by shipping about 22 million tons to the world’s largest importer of iron ore in 2017.

Top ore exporters to China in 2017 were Australia, Brazil, South Africa, India, Ukraine and Iran respectively, according to Chinese customs statistics shared with Financial Tribune by senior market analyst, Kayvan Jafari Tehrani. 

Shipments to China make up about 91% of Iranian iron ore exports. Accounting for nearly 70% of the world’s seaborne ore trade, China imported 1.07 billion tons of iron ore in 2017, up 8% YOY, SteelMint reported.

What spurred iron ore demand is the industrial goliath’s crackdown on pollution, as the government mandated steelmakers to use higher-grade ores to curb pollution, buoying imports from high-content ore producers.

The exports came as a host of negative factors such as India’s plan to boost shipments, Iran’s high finished prices and the Iranian government’s plan to slap tariffs on iron ore exports threatened the sector’s foothold in China.

Iran accounts for about 3% of global iron ore reserves estimated at 4.5 billion tons with over 200 ore deposits.

According to the United States Geological Survey, Iran holds the world's 10th largest iron ore reserves.

Miners and lawmakers have been locked in a heated debate over the issue of unprocessed mineral exports, especially iron ore, for years. 

Government officials believe Iran’s rising steelmaking capacity, which is expected to reach 55 million tons by the end of 2025, requires a steadily increasing feedstock of iron ore and that exporting the material is against the industry’s interests.

On the other hand, Iranian iron ore miners, many of whom belong to the private sector, believe that a looming specter of bankruptcy can only be averted through exports, arguing that exports are their last remaining lifeline amid the unbalanced domestic market.

According to Sajjad Ghoroqi, a member of Iron Ore Producers and Exporters Association of Iran, over 60% (93) of Iranian mines hold less than 1 million tons of iron ore and are mostly operated by the private sector. Furthermore, 26% (41) of the mines have 1-10 million tons, 4% (7) hold 10-50 million tons and 5% (8) boast reserves of more than 50 million tons. Larger mines are either completely state-owned or semi-privatized.

Ghoroqi said small- and medium-sized iron ore mines account for only 5% of Iran's total reserves, while constituting 24% of Iran’s total annual ore production.