The Ministry of Industries, Mining and Trade will impose 20-25% tariffs on export of unprocessed minerals as of Sept. 23.
According to Deputy Industries Minister Jafar Sarqeini, the decision is aimed at supporting domestic production, preventing export of unprocessed minerals and generating more value-added.
Sarqeini noted that tariff levied on the export of iron ore concentrates and pellets will amount to 25%, the Industries Ministry's news service Shata reported.
Iron ore seems to be at the forefront of the new restrictive measure, as Iran will face 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 is sold without being processed.
Moreover, exports become more lucrative when the value of national currency declines. The rial lost nearly two-thirds of its value over the last Iranian year that ended on March 20, 2019.
According to Industries, Mining and Trade Minister Reza Rahmani, 10% of Iran's iron ore output are currently exported.
A total of more than 17 million tons of iron ore were exported from Iran in the last fiscal year (March 2018-19), figures released by the Iranian Mines and Mining Industries Development and Renovation Organization show.
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 more than $840 million were exported from the country during the period under review.
Tariff levied on the export of iron ore concentrates and pellets will amount to 25%
According to an Esfahan Steel Company official, Nematollah Mohseni, excessive exports of iron ores have caused many steelmakers, including ESCO, to operate under capacity, IRIB News reported.
Iran was the sixth largest supplier of iron ore to China by shipping about 22 million tons to the world’s largest importer of iron ore in 2017.
Top ore exporters to China in 2017 were Australia, Brazil, South Africa, India, Ukraine and Iran respectively, according to Chinese customs statistics shared with Financial Tribune by senior market analyst, Kayvan Jafari Tehrani.
Shipments to China make up about 91% of Iranian iron ore exports. Accounting for nearly 70% of world’s seaborne ore trade, China imported 1.07 billion tons of iron ore in 2017, up 8% YOY, SteelMint reported.
What spurred iron ore demand is the industrial goliath’s crackdown on pollution, as the government mandated steelmakers to use higher-grade ores to curb pollution, buoying imports from high-content ore producers.
The exports came as a host of negative factors such as India’s plan to boost shipments, Iran’s high finished prices and the Iranian government’s plan to slap tariffs on iron ore exports threatened the sector’s foothold in China.
Iran accounts for about 3% of global iron ore reserves estimated at 4.5 billion tons with over 200 ore deposits.
According to the United States Geological Survey, Iran holds the world's 10th largest iron ore reserves.
“A new iron ore deposit was discovered in Iran's Yazd Province in 2017, which is estimated to be about 2 billion tons with 70% iron content,” the head of Yazd Industries, Mining and Trade Organization.
“This mine is globally and nationally unique in terms of reserves and content, and will be a significant boon to provincial industries and the country as a whole,” Mohammad Reza Alamdar-Yazdi was also quoted as saying by Mehr News Agency.
He noted that the reserves were discovered at a depth of 1,500 kilometers.
Miners and lawmakers have been locked in a 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 hold that their 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. Furthermore, 26% (41) of the mines have 1 to 10 million tons, 4% (7) hold 10 to 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.
