ESCO Calls for Rise in Iron Ore Export Duty

EghtesadOnline: Despite the 25% customs duty imposed on the export of iron ore, the export of raw materials used in steelmaking is continuing and the duties have not discouraged exporters at all, the managing director of Esfahan Steel Company said.

News ID: ۷۸۵۰۷۱

27 November 2019

Mansour Yazdizadeh also believes that a 40% customs duty should be imposed on iron ore exports to prevent the depletion of iron ore reserves, ILNA reported.

ESCO is in desperate need of iron ore in the form of fines/lumps, and domestic iron ore demand has gone up, Financial Tribune quoted him as saying.

The Ministry of Industries, Mining and Trade imposed 20-25% tariffs on the export of unprocessed minerals, including iron ore, as of Sept. 23.

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

The official says 25% duty has been imposed on the export of iron ore concentrates and pellets, the Industries Ministry's news service Shata reported.

Iron ore seems to be at the forefront of the new restrictive measure, as Iran is facing a shortage of iron ore to feed its steel industries in the near future.

Bahram Soltani, the head of Iranian Steel Producers' Association, says the domestic market should be given priority when it comes to supplying iron ore and only a surplus should be left aside for exports.

This is while due to the ease of trading and high demand in global markets, Iranian iron ore has a good market overseas.

Exports became lucrative when the value of national currency declined drastically last year. The rial lost nearly two-thirds of its value against the dollar in the last Iranian year that ended on March 20, 2019.

A total of 17 million tons of iron ore were exported from Iran in the last fiscal year (March 2018-19).

Iron ore in the form of fines/lumps had the lion’s share from exports with 8.84 million tons, followed by iron ore concentrate with 5.52 million tons and iron ore pellet with 2.78 million tons.

IMIDRO data show exports of iron ore concentrate, iron ore fines/lumps and iron ore pellet earned $380.95 million, $258.75 million and $201.92 million respectively, meaning a total of $840 million worth of such products were exported last year.

According to the United States Geological Survey, Iran holds the world's 10th largest iron ore reserves.

Iran accounts for about 3% of global iron ore reserves estimated at 4.5 billion tons with over 200 ore deposits.

Proven reserves, according to Chairman of Iranian Mines & Mining Industries Development & Renovation Khodadad Gharibpour, stand at around 3.3 billion tons, which are expected to be completely consumed by the domestic steel industry by the fiscal year ending March 2036.

Miners and lawmakers have been locked in heated debate over the issue of unprocessed mineral exports, especially iron ore, for years.

Government officials believe Iran’s rising steelmaking capacity, which is expected to reach 55 million tons by the end of 2025, requires a steadily increasing feedstock of iron ore and that exporting the material is against the industry’s interests.

On the other hand, Iranian iron ore miners, many of whom belong to the private sector, believe that a looming specter of bankruptcy can only be averted through exports, arguing that exports are their last remaining lifeline amid the unbalanced domestic market.

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.

About 26% (41) of the mines hold 1-10 million tons, 4% (7) have 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.