The average age of Iran’s mining machinery is currently around 40 years, according to the head of the House of Industries, Mining and Trade.
“One reason [for not purchasing new machinery] is that they are too expensive due to the high rate of foreign exchange [against the Iranian rial], which makes them unaffordable for small mines,” Abdolvahhab Sahlabadi was also quoted as saying by Mehr News Agency.
The official added that there is also a shortage of mineral machinery spare parts in the domestic market.
“The ban on imports of mining vehicles and machinery with no local production has been lifted,” deputy minister of industries, mining and trade, Reza Mohtashamipour, announced recently.
“There are more than 15,000 units of mining machinery in Iran, which are more than 20 years old and require replacement,” he was quoted as saying by IRNA.
Noting that a part of the aging fleet may be renovated, he said the rest need to be replaced through import.
The deputy minister emphasized that the liberalization of import only applies to machinery that cannot be produced domestically.
“The import of machinery that can be produced domestically still remain banned,” he said.
Large Mines Operating at Half Capacity
The ban on import of mining machinery has forced Iran’s large mines to operate at 50% of their capacity and the country’s small- and medium-sized mines are on the verge of closure, the deputy head of Iran Mine House, Hamid Reza Amirian, said earlier.
“This is a disaster for our mining industry. It’s been a few years since this ban has come into effect. The decision was made on faulty grounds to begin with,” he was quoted as saying by the news portal of Iran Chamber of Commerce, Industries, Mines and Agriculture.
The official explained that after banning automobile imports a few years ago, the government somehow put mining vehicles in the same category. Mining companies cannot import 100- and 150-ton dump trucks and 200- and 300-ton loading machinery.
“Officials say the reason behind this ban is in support of domestic production of these machinery, whereas there is no such thing as domestic production of most mining machinery. These heavy machineries are produced by only six or seven companies worldwide. Under the current circumstances, we cannot become a producer,” he said.
Amirian noted that there are 5,000 abandoned mines and 3,000 gravel and sand mines that need machinery in order to resume operation.
“Our local production cannot even meet 10% of their demand for machinery. As economic sanctions imposed on Iran don’t allow the import of new machinery. We can only purchase secondhand ones,” he said.
Four Times the Global Price
Head of Mining Commission with Isfahan Chamber of Commerce, Hesameddin Farhadi, had earlier said that due to the ban, Iranian miners have had to purchase mining machinery at four times the global price.
“A secondhand loader is priced at around $115,000 in the international market but due to the shortage of this heavy machine in the domestic market, we have to purchase it at 130 billion rials [around $400,000],” he added.
According to the official, most of the mining machinery presently used in Iran were imported in the fiscal 1985-86, which has decreased efficiency in the mining sector by 50-60%.
“Mining machinery are means of production, yet officials in the Ministry of Industries, Mining and Trade have somehow put them in the same category as luxury goods! Due to the shortage of foreign currency reserves, economic instability and the policy to support local production, the import of luxury cars has been banned and the same was applied to mining machinery and vehicles,” he said.
Need for 25,000 Mining Machines, Vehicles
Mehrdad Akbarian, the deputy head of the Mines and Mineral Industries Commission of Iran Chamber of Commerce, Industries, Mines and Agriculture, said the mining sector currently needs 25,000 machines and vehicles.
“Over the years, two factors have impacted the price of mining machinery. One is the depreciation of the Iranian rial against the dollar and the other is the shortage of these machines in the local market. The latter has made matters much worse. If a machine is valued at, for example, $80,000 in the international market, you cannot buy it for less than $160,000 in Iran, because the options are very limited,” he added.
Referring to the decline in investment in the mining sector, Akbarian said the industry is faced with a series of problems these days, but the ban on imports is the most pressing issue.
“Not all countries set up production lines to meet their demand. They purchase them from the existing global brands and instead, launch businesses offering sales services, spare parts and maintenance,” he said.
Gov’t Support Causes Trouble
According to Alireza Baqeri, the head of the Mining Commission of Birjand Chamber of Commerce, around 20 years ago, Heavy Equipment Production Company (HEPCO) made a strategic mistake in its decision, such that it came close to bankruptcy a few years ago.
“Because they want to bring it back into the game, the government banned the import of mining machinery,” he added.
HEPCO is an Iranian corporation that manufactures construction equipment, railroad cars, trucks, forklifts and the industrial machinery in oil, gas, energy, metal and mining industries in Arak, Markazi Province. The company is the largest heavy equipment manufacturer in the Middle East. It was established and registered in 1972, with the intention of conducting the assembly and production of heavy equipment.
Noting that government support for HEPCO has spelled trouble for mining companies, he said, “More than 7,000 mines in the country are waiting for HEPCO to see if they can provide the required machinery or not. Some 70% of Iran’s mines are small-sized. HEPCO is not capable of manufacturing their demand for small machinery either, let alone heavy ones.”
Noting that Iranian miners are in urgent need to renew they fleet, Baqeri said, “Loaders, bulldozers, graders and excavators are not luxury vehicles and the fact that they have been placed in the same category is absurd.”
Iran’s Mineral Riches
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, metallic minerals constitute 10-15% of total reserves and the rest are non-metallic minerals,” he said.
According to the United States Geological Survey, Iran holds the world's largest zinc, ninth largest copper, 10th largest iron ore, fifth largest gypsum and barite, and 10th largest uranium reserves.
Overall, Iran is home to more than 7% of global mineral reserves.
