Economy, Business And Markets

Mining Hurt by Sliding Iron Ore Prices

Mining Hurt by Sliding Iron Ore Prices Mining Hurt by Sliding Iron Ore Prices

The sharp global decline in iron ore prices has led to lower profitability in the mining sector, dissuading some countries from investing in Iran’s mining sector, Eghtesadnews reported.

Some companies from the UAE had earlier shown interest to invest in Iran’s steel and mining sectors but apparently changed their minds in light of recent developments in the iron ore market. This is while cooperating with countries that possess advanced mining technologies or huge financial resources for investment is essential for the development of the mining sector.

While iron ore prices have reached around $60 per metric ton, experts believe the prices could gradually increase to $65 within the next two years.

Market analysts on the other hand predict that the prices could decline further to below $50 or $40 per ton in the near future.

Since the iron ore prices dropped in 2012, high extraction costs have made the operations unfeasible, pushing many Iranian mines, particularly the smaller ones, to stop their activities. While every ton of iron ore was sold at $92.63 in August last year, the price fell by 27.2% to reach $67.39 in January this year.

Mining experts have, on numerous occasions, warned that the tumbling iron ore prices, in addition to high mine royalties imposed by the parliament recently, would either force some Iranian mining companies to shut down or declare bankruptcy.  As many as 40 small private iron ore mines were closed during the previous Iranian calendar year, which ended March 20, 2014.

This is while the high tariffs imposed on iron ore exports, claimed by officials to be aimed at encouraging domestic steel production, have also reduced iron ore exports significantly.

Official statistics, released by Iran Customs Administration (IRICA), show iron ore exports have decreased substantially, reaching around 20,000 tons in January, from 1.4 million tons in March last year.