Economy, Business And Markets

Private Sector Urged to Embark on New Explorations

Private Sector Urged to  Embark on New ExplorationsPrivate Sector Urged to  Embark on New Explorations

Mostafa Mo’azenzadeh, top aide to the vice president urged the private sector to start exploring new iron ore mines, noting that active iron ore reserves will be depleted in the near future.

“The mining sector should not be satisfied with the current 2.8 billion metric tons of proven iron ore reserves. It should encourage investment for further explorations as the recently approved Comprehensive Steel Plan predicts acute shortage of iron ore by year 2032,” Eghtesadnews cited Mo’azenzadeh, who is the founder of Iranian Mines and Mining Industries Development and Renovation Organization (IMIDRO) as saying in an exclusive interview.

“The private sector should assume a leading role in mining explorations as the government appears to be incapable of carrying out major exploration operations,” said the official, warning that active mines will face serious problems in the near future if immediate measures are not taken.

There are currently two options for the administration to provide the steel sector with the required raw material. It can either import iron ore concentrate or invest heavily in exploration activities to discover new iron ore mines. The second solution is not practical under the current circumstances where the government is facing budget deficits mainly caused by the recent sharp decline in global oil prices.

Officials have concentrated their efforts on meeting the objectives of the 2025 Vision Plan, according to which Iran should reach an annual production capacity of 55 million metric tons of crude steel over the next decade. According to experts, the only reasonable solution to overcome the looming iron ore shortage is to explore deep mines and develop underground mining.

A few iron ore companies have already started exploration operations but their performance is not satisfying as they do not pursue systematic explorations mainly to avoid the astronomical costs, said Mo’azenzadeh, adding that these companies start extraction shortly after discovering limited reserves until the resources are depleted, after which they resume their sporadic search for new reserves.”

Another complex issue in the mining sector, according to the official, is that mining companies often do not report the actual capacity of the discovered reserves to the ministry of industry, mine, and trade, fearing that the government would charge them in more mine royalty.

Noting that the proven iron ore reserves are much more than what official figures indicate, he strongly urged the government to address the concerns expressed by the private mining companies over the issue of royalties to reach a more accurate assessment of the status of iron ore reserves.

The 30% mine royalties proposed recently by lawmakers has sparked strong criticism among the owners of mining companies. Steel industry experts have repeatedly warned authorities that imposing such heavy royalties harms small and medium-sized private iron ore companies and could lead to their closure in the near future. They point out that with lack of sufficient investment on mine exploration, the steel sector would soon be pushed to rely entirely on import of iron ore concentrate.

Mo’azenzadeh further emphasized the need for preliminary assessments to identify the probable reserves to guide the investors prior to starting mine exploration operations, citing Chadormalu mine in Yazd Province as the best example where iron ore production doubled thorough systematic explorations.  He also noted that if new iron ore reserves are not discovered soon, the administration should impose restrictions to help regulate the exports.