4th Non-Ferrous Metals Confab, Exhibition Opens in Tehran

The Fourth Iran Non-Ferrous Metals Industries Market and Related Technologies Conference and Expo opened in Tehran’s Olympic Hotel on March 7. 
The three-day event, hosted by Donya-e-Eqtesad Media Group (Financial Tribune’s parent company), in collaboration with the National Iranian Copper Industries Company, has been organized with the aim of promoting dialogue among the main industry players, including the government, the private sector and specialized national and international associations.
Alireza Bakhtiari, CEO and owner of Donya-e-Eqtesad, was the inaugural speaker at the event. He called attention to meagre and insufficient investment in Iran’s mining sector and asked policymakers to take into account the country’s mineral riches and the need to draw up strategic plans to take advantage of the opportunities lying ahead.
“Deregulation, doing away with command pricing and putting an end to restrictions related to trade and banking are the main demands of industry players from the country’s policymakers,” he added.

Mineral Diversity, Reserves 

Iran is home to 81 types of minerals with reserves totaling 37-40 billion tons, according to Alireza Shahidi, the head of Geological Survey and Mineral Exploration of Iran. 
Construction materials, including gravel, rubble stones, sand and different types of stones, account for 62% of Iran’s mineral reserves, metal minerals constitute 10-15% of total reserves and the rest are non-metallic minerals.
“Gold reserves are increasing on a daily basis. Recently, new mines have been identified in South Khorasan Province, the reserves of which, we hope, should help increase the country’s mineral wealth to 100 billion tons,” he added.
Shahidi said until 2015, the level of exploration and investment were in tandem, now a wide gap has opened up between the two, suggesting that the costs of exploration are on the rise, IRNA reported.
He noted that a total of 945,000 square kilometers in Iran have undergone exploration operations in the 2000s.
“The country’s mines are mostly close to the surface; [the exploitation of] hidden mineral reserves in the depths of the earth need to increase.
Overall, Iran is home to more than 7% of global mineral reserves,” he added.

Decline in Investment

A new report by Tehran Chamber of Commerce cites the Statistical Center of Iran’s mining sector data to show how investment in operating mines has declined over the years in real terms.
According to the report, the nominal investment volume in operating mines stood at about 55 trillion rials ($215.69 million at current exchange rate) in the fiscal 2020-21 compared to 29 trillion rials ($113 million) in the fiscal 2015-16. However, in real terms, i.e. taking into account the producer inflation in the mining sector, the investment volume shows 18% decline from 28.2 trillion rials ($110 million) to 10.3 trillion rials ($4 million) over the five-year period.
Another important indicator is investment volume over value added. The percentage declined from 35% in the fiscal 2015-16 to a record low of 4.4% in the last fiscal year.
According to SCI, a total of 5,782 mines were operating in the fiscal 2020-21, registering a 16.2% growth year-on-year.
In terms of number, sand mines accounted for the highest share of total operating mines with 1,463 (up 17.3% year-on-year) followed by limestone with 896 mines (down 8.6% YOY) and gravel with 773 mines (up 20.4% YOY).
Khorasan Razavi, Semnan and Fars provinces had the highest number of operating mines during the period with 567, 384 and 367 respectively and Gilan, Alborz and Ilam had the lowest with 54, 53 and 47 mines respectively.
A total of 120,327 people worked in Iran’s operating mines in the fiscal 2020-21, of whom 24,802 were simple workers, 33,932 skilled workers, 7,902 technicians, 9,612 engineers, 20,184 engaged in transportation and 23,895 worked in administrative and financial departments.
The number of workers increased by 12.4% compared with the year before.
Kerman, Yazd and Fars provinces with 30,449, 14,203 and 7,433 had the highest number of workers in operating mines.
Iron ore, copper ore and sand mines had the highest number of workers with 29,783, 17,137 and 13,881 people respectively. Notably, the number of female workers increased by 361 people to 1,607 from 1,246 in the last year. 
A total of 446.64 million tons of minerals worth 1.49 quadrillion rials ($5.84 billion) were produced in the year under review, of which 2.54 million tons worth $160 million were exported directly from the mines, registering an 81.5% and 70.6% decline in weight and value respectively.
Kerman, Yazd and East Azarbaijan provinces had the highest value in annual production with 811.58 trillion rials ($3.18 billion), 259.53 trillion rials ($1.02 billion) and 135.63 trillion rials ($535 million) respectively.
Iron ore, copper ore and sand mines had the highest annual production value with 853.95 trillion rials ($3.35 billion), 425.83 trillion rials ($1.67 billion) and 48.95 trillion rials ($191 million) respectively.
Iron ore, decorative stones and coal with 27.09 trillion rials ($106 million), 4.78 trillion rials ($18.7 million) and 4.31 trillion rials ($16.9 million) saw the highest volume of nominal investments respectively.
Yazd, Kerman and South Khorasan Provinces had the highest volume of nominal investments in operating mines with 16.09 trillion rials ($63 million), 9.9 trillion rials ($38.8 million) and 5.16 trillion rials ($20.2 million) respectively.
From the total investments, 32.38 trillion rials ($126 million) were spent on machinery, tools and durable equipment, 2.7 trillion rials ($10.5 million) on vehicles, 1.2 trillion rials ($4.7 million) on office supplies and equipment, 13.62 trillion rials ($53.4 million) on buildings and facilities (excluding purchase of land), 1.02 trillion rials ($4 million) on roads, 3.1 trillion rials ($12 million) on development and exploration, and 142 billion rials ($556,862) on computer software. 
The nominal value-added generated by the operating mines hit 1.25 quadrillion rials ($4.9 billion) in the fiscal 2020-21, registering a 152.12% growth year-on-year. 
Kerman, Yazd and East Azarbaijan Province’s mines had the highest share of value added with 680.55 trillion rials ($2.67 billion), 211.82 trillion rials ($830 million) and 125.58 trillion rials ($492 million) respectively.
Iron ore, copper ore and lead and zinc ore mines generated the highest value-added with 683.35 trillion rials ($2.68 billion), 395.44 trillion rials ($1.55 billion) and 42.83 trillion rials ($167 million) respectively.

Command Pricing

The intervention of the government in the market through command pricing of products, which the event’s inaugural speaker referred to, has caused an array of problems in many industries.
“Over the past month, 110 steel mills have suspended production after the Ministry of Industries, Mining and Trade ordered them to lower the prices of their products,” Reza Shahrestani, a member of the board of directors of Iran Steel Producers Association, said recently.
Noting that the closures are temporary, he said the ordered reduction in the prices of steel products coincided with rising prices of upstream industry products considered as feed for steel mills, ILNA reported.
“The 110 units that have suspended production are all smelting plants. Rolling mills are in a worse condition as they are forced to produce at a loss because of their outstanding debts to banks,” he said.
Denouncing the policies of the Industries Ministry, Shahrestani said steelmakers have been forced to first sell their products in the domestic market through the Iran Mercantile Exchange platform before they can export what remains.
“Supply is by far higher than demand in the domestic market. For instance, our steel ingot production is at 19 million tons [per year] whereas domestic consumption is only 12 million tons,” he said.

Private Sector Taking Backseat

Masoud Khansari, president of Tehran Chamber of Commerce, Industries, Mines and Agriculture, was the second keynote speaker at the event.
Khansari also censured the government for flexing its muscle in the economic sphere and undermining the role of private players.
“The private sector has yet to find its place [in the economy]. Non-governmental public entities are growing day by day and the private sector is weakening consequently,” he said, noting that all successful economies owe their development to private players.
Elsewhere in his remarks, Khansari referred to the need to attract investment to the country and the risk of losing investors as a result of unfriendly business environment.
“The gravest danger that threatens Iran is the despair and widespread migration of human capital,” he recently wrote for the news outlet of the chamber.
“Sadly, we are seeing that in addition to the migration of academics and scientists, many entrepreneurs and investors, who are both tired of and disappointed with the prospect of reform, are leaving the country.”
The official stated that what’s more alarming is that this trend is picking up pace among the young generation of startup entrepreneurs. 
“You only need to ask the directors of top Iranian startups about the number of employees they have lost over the past months and years because of migration,” he wrote, noting that the migration of entrepreneurs and investors should be a wake-up call for policymakers and government; this reality is a bitter pill they should swallow instead of ignoring it in order to resolve this problem.

Call for Investment in Copper Industry

Managing Director of the National Iranian Copper Industries Company, Ardeshir Sa’d-Mohammadi was next in line to address the event. 
Noting that Iran has the world’s seventh biggest copper reserves, he predicted global demand for copper would grow in the years ahead. 
“Oil accounts for 39% of all energy consumption in the world. In 2050, that is in under 30 years, this share is expected to reduce to 4%. Electricity, on the other hand, currently has an 18% share in global energy consumption, which is expected to reach 51% by 2050,” he said, adding that copper plays an instrumental role in electricity production.
Noting that 99% of global copper producers were profitable in 2021, he said the investment outlook for this mineral is bright.
“‌In the next 10 years, at least 35% of the world's vehicles will be electric, considering that the average consumption of 4 kg of copper in ordinary vehicles and 89 kg in electric vehicles, we will see a change in demand for copper in cars in the near future,” the NICICO chief was quoted as saying earlier.
He stressed that by 2035, 1.3 billion people are expected to be added to the world's population and even with the current per capita consumption of copper, which is 3.2 kg, we will face an increasing demand for copper that year due to population growth.
The official also pointed to the increasing use of renewable energy in the world, which will be accompanied by an increase in copper consumption.
He further referred to the annual investment of $4 trillion in infrastructure, including roads, airports, railroads and electricity, all of which require copper.
The National Iranian Copper Industries Company’s sales more than doubled (101% growth) in the current fiscal year’s first 10 months (March 20, 2021-Jan. 20) compared with last year’s similar period, according to the managing director. 
“During this period, the company earned 628.47 trillion rials [$2.46 billion] from the sale of its products,” Sa’d-Mohammadi was also quoted as saying by MesPress.ir
“NICICO sales stood at 76.59 billion rials [$300 million] in the 10th month of the year [Dec. 22-Jan. 20],” he added.
NICICO is a leading copper producer in the Middle East and North Africa region and its mines hold close to 14% of Asia’s copper deposits and about 3% of global reserves.
The functions of this company include, among others: extraction and operation of copper mines to produce high-grade copper products such as cathode, slab, billet and 8-mm wires.
NICICO earned 260.46 trillion rials ($1 billion) in net profit in the last Iranian year (March 2020-21), up 118% YOY.
The company’s sales volume stood at 419.4 trillion rials ($1.64 billion) during the year, up by 87% YOY. 
Sarcheshmeh and Miduk in Kerman, and Sungun in East Azarbaijan are among the most important copper mines of the country.
Sungun Complex is a subsidiary of NICICO and Khatam Al-Anbia is a major conglomerate of Iran.
It is Iran’s largest copper mine with 1.5 billion tons of identified reserves.
“Sungun copper reserves have increased by 523 million tons in the past two years,” NICICO’s managing director was quoted as saying by IRNA.
According to Sa’d-Mohammadi, Sungun copper reserves were estimated at 320 million tons three to four years ago, but currently they have risen to 2 billion tons, of which 1.3 billion tons are deemed “economically viable”.
According to the Majlis Industries and Mines Commission, the value of Sungun copper mine reserves stands at $320 billion, equivalent to 10 years of Iran's exports.
At the current rate, copper extraction from the Sungun mine will last 380 years and even if the current annual production of 300,000 tons of concentrate triples, it will take 130 years to complete extraction from the mine reserves, it added.