The Forum for Partners in Iran's Marketplace

September 2018, No. 88

IMIDRO Exclusive

We Are Self-Sufficient in Domestic Production

In general, it seems that the country has experienced difficult crises in different periods, and if we have empathy and unity, and timely decision-making power, we can overcome this situation.

Deputy minister of industry, mine and trade announced the formation of a committee in the ministry and in IMIDRO (Iranian Mines & Mining Industries Development & Renovation Organization) to counter the sanctions and emphasized: “The country has experienced difficult crises in different periods and if there are empathy and unity and we have timely decision-making, we can move through the new conditions.”
Dr. Mehdi Karbasian believes that “the conditions of sanctions and economic pressures facing the country are not new, and Iran’s economy has been faced these conditions for many years. In each period, solutions have been considered to deal with the sanctions.” What follows are excerpts of a recent interview with Karbasian:

How do you assess the current status of mining and mineral industries?

I believe the least pressure will be imposed on mining and mineral industries, because the raw materials are domestically made, and, fortunately, we are self-sufficient in domestic production, but we will probably face problems in import of equipment and receiving facilities.
All our industries need equipment and facilities, but I believe mining and mineral industries are less problematic than other areas.  

This is what concerns production, but a large part of the revenues comes from sales. What will be the situation in this sector?

The country’s export capacity in mining and mineral industries is very good. In 1396 (2017-18) 20% of non-oil exports was related to mining and mineral industries. This is a very big number, especially when you consider the role of mining and mineral industries in GDP, the figure stands at about 5% to 6%. Of course, this share has room for growth.
In the first two months of the calendar year1397 (started March 21, 2018), our production and exports both improved but if the banking system fails to move money or if the Europeans refuse to cooperate we will face problems because part of the new markets made available in the field of mineral industries after the JCPOA (the Joint Comprehensive Plan of Action) over the past one or two years are related to Europe and even Canada. If these markets are confined it will be problematic.
Fortunately, we have formed a special committee in the Ministry of Industry, Mine and Trade and IMIDRO and these issues are being monitored on a daily basis. In general, it seems that the country has experienced difficult crises in different periods, and if we have empathy and unity, and timely decision-making power, we can overcome this situation. 

Once it was said that the mining sector could take the place of oil in the Iranian economy. Considering the new situation in Iran, do you think such an idea could be realized?

As an expert, I would not prefer the mining sector take the place of oil because oil, gas, iron ore, coal and gold are parts of mines, and their exploitation should be positive; but the point is that we should be active in mining sector so that reliance on oil would decrease in GDP and we can have product diversity. In calendar year 1396, we had about $45 billion in non-oil exports, of which about 20% and nearly $9 billion were related to mines and mining industries. This shows that the economy has taken this course.

As you know, in 1390 (2011/12) and 1391 (2012/13) steel exports stood at about 1 million tons; this is while one or two years earlier (namely in 2009 and 2010), we had about 6 million tons of steel imports. But in 1396, our imports stood at less than 2 million tons which related to steel items alone that were not manufactured internally and we exported about 9 million tons.
In 1392 (2013/14), crude export of iron ore stood at 23 million tons and the figure decreased to 18 million tons in 1396 of which 5 million tons were concentrates. In 1396, we were an exporter of sponge iron, indicating that the country is on the right track. Given that IMIDRO has paid special attention to exploration in the past few years, we forecast a clear future in this field.
The fact is that the size of the country is 1.6 million square kilometers, and the amount of exploration in the country is more related to open pit mines, which is not complete. We’ve done 250,000 square kilometers and there’s still plenty of work to do.
Deep and underground mines are also among the mines we have not worked on. We have only made 2 drilling operations in the Central Plateau and reached more than 2 billion tons of iron ore reserves. This indicates that the country has a large capacity to create balance in the oil, gas and mining revenues. 

Can you provide us with some Information on the amount of foreign investment in the mining sector in post-JCPOA period?

After the JCPOA few things happened. First, large mineral and mineral industries companies came to Iran and our exports to Europe began. The very important thing was technology. We could not run some projects in certain areas. For example, the titanium project had been abandoned years ago but we launched it. In the other sections, we had a similar situation.

We implemented good projects worth 100 to 150 million euros through financing or joint ventures but unfortunately, after the change of government in the United States, the new government and the Republicans began to threaten European banks and insurance companies. The fact is that some investments slowed down.
If you remember, during President Rouhani’s trip to Europe, IMIDRO wrote a contract with Italian companies at a cost of few billion dollars. We formed a joint venture, and on the same basis, the projects were defined, but the progress was slow. The reason was that the European banking system did not have the cooperation that was expected, but some work was done in small or medium sized projects.
In total, in 1396, IMIDRO carried out nearly $2 billion of projects and our forecast is that in 1397 (2018/19) this figure will reach about $6 billion. All unfinished projects are currently under construction and new projects are being implemented according to the time table.
We hope that in 1397, large and good projects will be commissioned such as the 5-million-ton Sangan concentrate project and the 2.5 million ton pelletizing project of Sangan. We hope that 6,000-ton project of Jajarm aluminum ingot will be operational until October. There are also several copper plants available to companies outside IMIDRO which will be commissioned this year.


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  September 2018
No. 88