Duties on exports of minerals, petrochemicals and agricultural products have been abolished, Director General of Export Department of the Islamic Republic of Iran Customs Administration Ali Akbar Shamani notified all customs terminals across the country in a recent letter.
The Ministry of Industries, Mining and Trade had sent a directive to IRICA on April 9 for the imposition of export duties on all mineral products to be effective in the new fiscal year (started March 21).
Customs duties were to be imposed along the steel production chain from iron ore to steel ingots and downstream products, as well as base metals, including copper, aluminum and zinc from concentrates to the metal and downstream products, petrochemicals, chemicals, glass, clinker, cement and all kinds of ferroalloys.
The rate of duties was said to be progressive in nature, meaning they increase as the export volume rises. The decision provoked strong criticism among businesspeople active in the field.
“Duties on mineral products is a short-term measure taken by the government for regulating the domestic market,” Mohammad Sadeq Mofatteh, deputy minister of industries, mining and trade, said.
“By levying customs duties on exports, supply to the domestic market will increase. We have a chart in the Industries Ministry based on which customs duties will be set on exports when domestic and global price difference exceeds a certain threshold,” he was quoted as saying by IRNA.
The export duties, he added, are subject to change in accordance with global price fluctuations, adding that last week, the duties were reduced because prices in the international market declined.
Amiri noted that the Industries Ministry plans to set customs duties on mineral products that see a price increase of 5% or more in the international markets, but those experiencing a price rise of 0-5% will be exempt.
“In setting customs duties, we take into account the domestic market situation as well. For some products, the mining industry had no problems supplying the local market so we eliminated the export duties we had set on them,” he said.
The duties were revised several times before being removed after strong criticism on the part of exporters.
All finished steel products were removed recently from the list of mineral products on which heavy export duties were imposed.
Export duties on steel slab, clinker, ferrochromium, ferrosilisium and iron ore concentrate have been set at 5%, Mehr News Agency reported.
Steel Exporters Lose $150-200 Million
The government’s decision to impose export duties on steel products has caused losses of between $150 million and $200 million to exporters, according to the executive manager of Steel Producers Union.
“All businesses along the steel production chain have suffered losses, yet no one is accountable,” Vahid Yaqoubi was also quoted as saying by the Persian daily Jahan-e Sanat.
The official noted that since the fiscal 2018-19, when the steel industry witnessed a series of inexpert and faulty decisions, the conditions of exporters worsened and foreign exchange rates increased over the years.
“The Ministry of Industries, Mining and Trade has been devising different kinds of regulations by issuing directives of all sorts, which last for only one or two months and are then repealed. This has severely damaged the industry.”
Yaqoubi noted that these directives work to prepare the ground for rent-seeking practices while helping intermediaries to make the most profit.
“Unfortunately, there is no supervision over the decisions made for the steel industry and when such financial losses are caused, no one accepts responsibility. We in the Steel Producers Union want the Inspectorate Organization of Iran and the prosecutor general to intervene and make clear who is to blame for such hefty damage to the industry,” he said.
Reza Shahrestani, a member of the board of directors at Iran’s Steel Producers Association, said the Industries Ministry’s new measure to impose customs duties on the exports of steel industry’s downstream product like ingots and reinforcement bars is a big mistake.
“The war between Ukraine and Russia has created a vacuum in the exports of these products. Now is the time for Iranian steel and mineral products to use this absence and find new markets across the globe. It is unfortunate that the government comes up with such ways of gaining revenues for itself, when it can instead think about how increased exports can raise the foreign currency earnings for the country,” he added.
Anoush Roham, secretary of Pipe and Profile Producers Syndicate, echoed the same concern and said now that Russia has been sanctioned, it has lost its international markets for many commodities and global prices have increased for the same reason.
“It was estimated at the beginning of the war that demand for Iranian commodities will increase and replace the Russian and Ukrainian commodities. Therefore, the Industries Ministry decided to set customs duties on the exports of some goods to be able to manage the situation and prevent a supply shortage in the domestic market. But there are many faults in the regulation that shows the decision is not thoughtful,” he said.
Karim Rahimi, a member of the board of directors at the Iranian Steel Rolling Association, says after oil, gas and petrochemicals, the steel sector brings in the most foreign currency to the country.
“I believe that the government’s decision was aimed at controlling local prices. But there are better ways to do so, which are less detrimental to the steel sector. One way is to provide raw materials like sheets to the industry and another way is to manage Iran Mercantile Exchange and make prices real.”
