Foreign Mining Firms Prefer Low profile in Iran

EghtesadOnline: Foreign mining companies still present in Iran are trying to stay under the radar over the fear of falling foul of US sanctions against the Islamic Republic, a senior manager at Iran’s largest mining holding, Iranian Mines and Mining Industries Development and Renovation Organization, said.

News ID: ۷۸۲۹۶۷

19 June 2018

“[Foreign] companies staying in Iran have reached out to Iranian mining industry officials and asked not to be named, and they have remained silent,” Amir Sabbagh, IMIDRO’s economic and investment development manager, told the Persian economic daily Donya-e-Eqtesad. “They believe saying anything could cause Americans to react.”

Several foreign companies, including Germany’s Siemens and Italy’s Danieli Group, have announced that they are winding down their business in Iran after US President Donald Trump decided to ditch the 2015 nuclear deal and reimpose US sanctions.

Danieli has halted work on finding financial coverage for orders worth €1.5 billion ($1.8 billion) it won in Iran, following the US withdrawal from the deal, according to Financial Tribune.

“With the withdrawal of the US from the treaty, the banks are no longer ready to fund Iranian projects for fear of secondary sanctions,” Danieli CEO Alessandro Trivillin told Reuters last month.

In 2016, Danieli signed a framework commercial agreement with Iran worth about $5.7 billion.

The group set up a steel machinery production plant in Eshtehard Industrial Park in Alborz Province in May 2017 through a €40 million investment made entirely by the Italian firm.

Finnish mining technology company Outotec expects order intake from Iran to slow, the company’s finance chief said last month.

Outotec, which builds plants, makes equipment and offers services for the metal and mineral processing industries, has a long history in Iran and remained in the market after the US instituted sanctions against Tehran in 2010.

CFO Jari Algars told Reuters by email that if project financing was not available, future orders would decline.

“Reinstating the sanctions would not stop business, but it will complicate it and slow it down,” he said.

Asked if Outotec was considering leaving the market, Algars said it was “too early to say”.

Trump unilaterally pulled out of the deal formally known as the Joint Comprehensive Plan of Action on May 9.

The reintroduced sanctions are set to snap back in August and November and target key parts of the Iranian economy such as banking and oil sales.

BMI Research group said the reimposition of US sanctions on Iran will only have a limited impact on the country’s mining and metals industry in the short run and is expected to do little additional damage to an industry already facing “a myriad of domestic operational challenges”.