Iran : Export Tariffs on Unprocessed Minerals Decreased by 5-15%

EghtesadOnline: Minister of Industries, Mining and Trade Reza Rahmani has sent a letter to the head of Islamic Republic of Iran Customs Administration, Mehdi Mir-Ashrafi, to implement revised-down tariffs on export of unprocessed minerals.

News ID: ۷۴۹۵۳۱

25 January 2020

The decision comes after the Industries Ministry imposed 20-25% tariffs on the export of unprocessed minerals as of Sept. 23, 2019, ISNA reported.

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

Now the ministry has reduced the tariffs levied on the export of some minerals, effective Jan. 30. The details are as follows:

* Decline in copper ores and concentrates from 10% to 5%

* Decline in chrome ores and concentrates from 25% to 10%

* Decline in lead ores and concentrates from 20% to 12%

* Decline in zinc ores and concentrates from 20% to 12%

Duty on Iron Ore Concentrates, Pellets to Remain Unchanged

Iron ore was at the forefront of the new restrictive measure, as experts have warned that Iran will face a shortage of iron ore to feed its steel industries in the near future.

Duty on exports of iron ore concentrates and pellets stand at 25% and the tariff will remain unchanged.

A 10% export tariff has been levied on direct-reduced iron, which didn’t have any so far.

Referring to the upshot of 25% tariffs on iron ore exports, Sarqeini told Donya-e-Eqtesad that Iran’s iron ore exports reached 4 million tons during the first nine months of the current Iranian year (March 21-Dec. 21). This is while an annual average of over 23 million tons was exported during the fiscal 2012-13, 2013-14 and 2014-15.

Data released by the Iranian Mines and Mining Industries Development and Renovation Organization show iron ore exports witnessed a noticeable downturn as of the seventh Iranian month (Sept. 23-Oct. 22, 2019), at the beginning of which the Industries Ministry started to impose the tariffs.

Iron ore exports during the eighth month (Oct. 23-Nov. 21) saw a staggering decline of 75.43% month-on-month and 80.32% year-on-year to reach only 311,000 tons.

In fact, iron ore exports during this month hit the lowest point since the beginning of last Iranian year (March 21, 2018).

The country exported 1.26 million tons of iron ore during the seventh month to register an increase of 8.48% compared to the month before and a 32.44% decline compared to last year’s similar month.

Although the decision has been aimed at encouraging mineral producers to create products with more value added, iron ore producers believe that under the current market conditions, even export of unprocessed minerals is vital to keep the economy going, as it helps bring in much-needed foreign currency revenues.

On the other hand, Nematollah Mohseni, an official with Esfahan Steel Company, said excessive exports of iron ores have caused many steelmakers, including ESCO, to operate below capacity.

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, Keyvan Jafari Tehrani.

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

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.

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.