Calls for Reducing Gov’t Role in Mining to Favor Private Sector

EghtesadOnline: The private sector could help policymakers come up with most efficient measures to develop the high-potential mining sector, a member of Tehran Chamber of Commerce, Industries and Mining said, hoping that the new minister of industries will have a closer relationship with private sector players.

News ID: ۷۵۱۶۱۵

02 December 2020

"The development of Iran's mining sector depends on the policymakers' willingness to accept the counsel of private investors … The new minister could prevent the repetition of previous mistakes and attract more investment to the sector," TCCIM.ir also quoted Sajjad Ghoroqi as saying.

Late September, the Iranian Parliament gave a vote of confidence to Alireza Razm-Hosseini who was nominated by President Hassan Rouhani to take the helm of the Industries, Mining and Trade Ministry after it was without a chief for about four months.

“The sector is facing major problems at present,” Ghoroqi said and referred to the government's decision to set a ceiling and a floor for steel prices.

"Such measures result in market imbalance, as they benefit some players more than the others. We at the chamber of commerce are against setting prices … We need to minimize the difference in prices in local and international markets in the short term and gradually develop a market in which prices are in accordance with demand and supply," he said.

In Ghoroqi's point of view, improper local policies have been the main reason behind the poor mining sector development, "even more than external sanctions".

"Imposing a ban on export is not the best solution for increasing supply in domestic market. The ban lowers the government's income from export tariffs," he said.

Instead, policymakers should promote further investments into mineral extraction, he added.

His comments were echoed by a member of Iran Chamber of Commerce Industries and Mining, Pedram Soltani, who recently said a wide range of factors have been hindering the growth of mining sector in Iran. Dominance of the government and the small contribution of the private sector, lack of persistent policies as well as sanctions are among the most influential ones.

"The sector has been struggling with unstable policies, without taking the benefits of the private sector into account … This is while our experience in the 1990s indicated that by relying on sectors highly dominated by the government, the economic would not make any progress," he said.

Soltani noted that the private sector has not made a considerable contribution to the mining sector in the past two decades.

State-owned Iranian Mines and Mining Industries Development and Renovation Organization, including 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 2021).

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

Soltani believes that imposition of sanctions against Iran has significantly affected the mining sector, though "the impact was less severe compared to the 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 point of view, the sector could have attracted a considerable sum 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.