State Dominance, Sanctions Hindering Mining Sector

EghtesadOnline: Awide range of factors have hindered the growth of Iran’s mining sector, including the government dominance, the small share of private sector, lack of consistent policies and sanctions, the deputy head of Iran Chamber of Commerce, Industries, Mines and Agriculture said.

News ID: ۷۵۱۵۵۱

22 November 2020

"The sector has been struggling with inconsistent policies, without taking the benefits of the private sector into account … This is while our experience of the 1990s indicated that the economy would not make any progress by relying on sectors dominated by the government," Pedram Soltani was also quoted as saying by Tccim.ir.

But the private sector has had a meager contribution to the mining sector in the past two decades, he added.

State-owned Iranian Mines and Mining Industries Development and Renovation Organization, taking its subsidiaries into account, has a 30% share in the country’s mineral extraction.

IMIDRO will have invested $3 billion in Iran's mining sector by the end of the current Iranian year (March 2020).

Policymakers have also failed to consider the development of mining industries, which could help multiply the added value of mining products for the economy.

Soltani believes that imposition of sanctions against Iran has significantly affected the mining sector, though "the impact was less severe compared to other business sectors".

"The growth of the mining sector would definitely be positive, if it was not hit by the sanctions," he added.

In Soltani's view, the sector could have attracted a considerable amount of foreign investments, which is vital for its development.

Iran’s mineral reserves currently stand at 55 billion tons, about 37 billion tons of which are proven. New explorations are expected to increase the figure by 30% to 60 billion tons by the end of the current fiscal year (March 2021).

A total of 15.69 million tons of mineral products worth $2.17 billion were exported from Iran in the first five months of the current fiscal year (March 20-Aug. 21).

Steel topped the list of exports in terms of value with $1.11 billion. It was followed by copper with $334.12 million and cement with $120.98 million. In terms of tonnage, cement had the lion’s share with 5.7 million tons, followed by steel with 3 million tons.

Some 410 million tons of minerals were extracted from Iranian mines in the last Iranian year (ended March 19, 2020).

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.

IMIDRO's Mining Exploration Investments

Iranian Mines and Mining Industries Development and Renovation Organization, the country’s largest state-owned mining holding company has invested 6 trillion rials ($24 million) in mining exploration across the country during President Hassan Rouhani's first term in office (August 2013-17).

"More than 900 high-potential mining zones have been identified so far … IMIDRO and its subsidiaries have carried out exploration operations over 700,000 square kilometers of the country’s area since 2012, 400,000 of which have been completed over the past two years," Khodadad Gharibpour, the head of IMIDRO, was quoted as saying by Fars News Agency.

A consortium of private companies accounted for 50,000 square meters of explorations, he added.

“IMIDRO is set to carry out operations on 280 new mining zones,” he said, noting that the remaining zones will be outsourced to the private sector.

“Exploration and mining in general cannot begin until mining firms are certified by the Industries Ministry. The issued permits so far, cover the excavation of lead, zinc, gold, copper, iron ore, coal and salt, on which work has begun gradually.”

Iran is said to have the largest area under mineral exploration in the Middle East.

H1 Mineral Production Permits

Latest report released by the Ministry of Industries, Mining and Trade shows a total of 308 mineral production permits were issued during the first half of the current Iranian year (March 20-Sept. 21), registering a 7.3% increase compared with the similar period of last year.

These permits are expected to create 2,541 jobs, which indicate a 2.2% rise compared with the similar period of last year.

The nominal mineral extraction capacity of the projects stands at 13.95 million tons, which shows an 18.1% increase compared with the corresponding period of last year.

The provinces of Fars with 29, Markazi with 27, Isfahan with 24, Semnan and Khorasan Razavi with 21 each, had the largest share of mineral production permits issued during the period.

Mineral production permits issued over the six months under review are expected to create the largest number of jobs in Fars Province (294), Kerman Province (245) East Azarbaijan Province (213), Khorasan Razavi Province (171), Markazi Province (146) and Semnan Province (145).

The provinces of Hormozgan, Khuzestan and East Azarbaijan with a total of 2.38 million tons, 1.66 million tons and 1.36 million tons respectively had the highest volume of nominal extraction capacities.

A total of 242 exploration permits were issued during the six months ending Sept. 21 to register a 1.3% rise compared with the corresponding period of last year.

Exploration costs stood at 574.9 billion rials (more than $2.13 million), registering a 30.9% increase YOY.