'Turning Point' in Private Investments on Iran's Mining Projects

EghtesadOnline: Iranian private investors have shown growing interest in Iran's mining projects in recent months, suggesting that bright prospects await the country's mineral industries in the near future.

News ID: ۷۴۸۰۸۸

06 August 2019

“A total of 11.3 trillion rials ($95 million) has been invested by Iran's private sector in mining projects and industries since December 22, 2018,” says Deputy Industries Minister Khodadad Gharibpour, Mehr News Agency reported on Sunday.

"This amount of investment marks a turning point in the participation of private investors in the development of Iran's mining sector," he added.

Gharibpour noted that 20 trillion rials ($168 million) worth of funding has made its way to mining projects during the period under review, Financial Tribune reported.

"Under the current harsh conditions as a result of the cruel sanctions, this huge amount of investment made during this short period of time [about eight months and a half] is a remarkable feat and indicative of private sector's trust in policymakers in the mining industry and a positive outlook facing mineral projects," he said.

The official, who is also the chairman of the Iranian Mines and Mining Industries Development and Renovation Organization (IMIDRO), noted that there is currently no limit on the funds spent by the Ministry of Industries, Mining and Trade, and its subsidiaries, on mineral explorations.

"We will spend as much as it takes to explore new reserves," he said.

$3b of Investment by Yearend

Gharibpour had earlier said IMIDRO will have invested $3 billion in Iran's mining sector by the end of the current Iranian year (March 2020). A total of 6,000 new jobs will be created as a result, he added.

IMIDRO is the biggest holding company active in Iran's mining sector and is owned by the state. It started mineral explorations in the fiscal 2014-15 over an area of 240,000 hectares, which was later expanded to cover 270,000 hectares.

According to the official, the organization is pursuing plans to expand mineral explorations to cover 300,000 square kilometers by the end of the second presidential term of Hassan Rouhani (August 2021).

"So far, significant reserves of iron ore, coal and gold, among other minerals, have been discovered," he was quoted as saying by IRNA.

Gharibpour noted that only half of Iran’s 600,000 square kilometers of explorable area has been surveyed for mineral reserves to date.

“The mining sector needs further exploration to move forward and this is now understood by the government and the parliament,” he said, adding that most mining explorations in Iran have been carried out at shallow depths, while going deeper would lead to a twofold increase in the discovery of mineral reserves.

Need to Expand Explorations, Reactivate Mines

The need to expand explorations in Iran comes as, according to Deputy Industries Minister Jafar Sarqeini, Iran will face a depletion of mineral reserves within the next decade.

“This is while available statistics on proven and probable mineral reserves have been based on explorations over a small area of the country with low depth of excavation dating back to many years ago,” he added.

According to Sarqeini, there is an urgent need to explore and discover new reserves as, under the current state of proven mineral reserves, Iran’s mineral reserves will only last until the fiscal 2030-31.

Mining officials say new explorations could help double Iran's iron ore and copper reserves.

“Last [fiscal] year [March 2018-19], 460 million tons of minerals were produced in Iran, which were 10% less than expected. In the current year, 550 million tons have been projected but we hope to extract 500 million tons,” he said.

Iran is home to 68 types of minerals with more than 37 billion tons of proven reserves and 57 billion tons of potential reserves.

According to the United States Geological Survey, Iran holds the world's largest zinc, ninth largest copper, 10th largest iron ore, fifth largest gypsum and barite and 10th largest uranium reserves.

Overall, Iran is home to more than 7% of global mineral reserves.

According to Gharibpour, Iran has 4,000 inactive mines.

Small mines in Iran have an 85% share in the mining sector’s employment, while they have a 65% share in the mining sector’s output.

The Ministry Industries, Mining and Trade says it aims to revive 150 small mines to create at least 1,000 jobs this year (started March 21).

About 138,000 people are employed in Iran’s mines while the mining industries have employed over 500,000 people.

$9.2b Worth of Minerals Exported Last Year

Iran exported 57.7 million tons of mineral products worth over $9.22 billion during the last fiscal year (ended March 20, 2019), down 5% and 2% in tonnage and value respectively compared with the year before.

The exports had a 49% share in tonnage and 21% in value of Iran’s total exports during the 12-month period.

Semi-finished and finished steel products took the lion’s share of exports in terms of value, as about 8.9 million tons worth about $4.11 billion were shipped overseas, up 3% and 17% YOY in volume and value respectively.

The category of “other mineral products” came second with about 9.75 million tons worth about $1.35 billion. The volume and value of shipments grew 15% and 9% respectively YOY.

Copper and downstream products came third with 365,070 tons worth about $917.53 million, down by 52% in tonnage and up by 13% in value YOY.

These were followed by cement with about 13.71 million tons valued at about $420.25 million, up 3% and down 17% in tonnage and value respectively YOY.

Other exported mineral commodities from Iran during the period under review were iron ore concentrate with 5.87 million tons worth $380.95 million, stones with 5.87 million tons worth $342.13 million, metals with 207,050 tons worth $318.6 million, iron ore (fines/lumps) with 8.84 million tons worth $258.75 million, zinc with 121,220 million tons worth $255.81 million, iron ore (pellet) with 2.78 million tons worth $201.92 million, aluminum with 92,490 tons worth $178.05 million, lead with 99,030 tons worth $128.01 million, direct-reduced iron with 533,620 tons worth $105.17 million and ferroalloy with 50,440 tons worth $73 million.

Iran also exported coal and coke with 425,420 tons worth $72.61 million, chrome with 316,870 tons worth $55.46 million, molybdenum with 3,140 tons worth $32.94 million, pottery and bricks with 85,940 tons worth $11.44 million, antimony with 930 tons worth $1.78 million, titanium with 150 tons worth $0.39 million, mining equipment with 100 tons worth $0.2 million, alumina powder with 220 tons worth $0.16 million, precious metals with 50 tons worth $0.16 million, mica with 80 tons worth $0.04 million and nickel with 10 tons worth $0.03 million.