Deputy minister of industry, mine, and trade, Mehdi Karbasian blames the 50% decline in global iron ore prices, sharp declines in the global prices of copper cathodes and concentrate as well as the significant decrease in China’s demand for the decline in Iran’s export of mineral products during the outgoing Iranian year (ends March 20), IRNA reported.
“The regulations imposed by the government are not the only cause of decline in the export of mineral products as other factors have also affected exports, said Karbasian, who also heads the Iranian Mines and Mining Industries Development and Renovation Organization (IMIDRO).
Conditional Sale of Raw Minerals
Noting that exporting raw minerals is only reasonable if the revenues are invested by the mining companies in processing sectors, Karbasian said: “We should not prevent these companies from temporarily selling their raw products.”
He added that considering the limited resources in the country for investment in the industrial and mining sectors, IMIDRO, as the major producer of many minerals, is striving to improve relations between the administration and the parliament, in a bid to make the best decisions.
Parliament recently passed a law based on which all iron ore mining companies are required to pay up to 25% value of their extraction to the government as mine royalty. The parliament has made the decision as a measure to confront and prevent the export of raw materials, as it has provided royalty discounts for the miners that invest in processing units to produce iron ore concentrate, iron ore pellets, and sponge iron.
Competitiveness Suffers
According to Karbasian, the global decline in iron ore prices has rendered Iran unable to compete with countries such as Australia and Brazil which have increased their iron ore export to China substantially. He suggested that no export tariff should be levied on iron ore exports under the current circumstances to help the exporters.
The main drawback is transportation costs. While Australia and Brazil transport their iron ore via bulk carriers with capacities ranging from 300,000 to 400,000 tons, Iranian cargo ships can carry only about 50,000 tons of the mineral.
Chinese Bureaucracy
The deputy minister also touched upon the issue of bureaucracy in China, which has caused delays in the €3 billion finance China had pledged to Iran’s steel projects. “Not even a single yuan has been paid to the seven provincial steel projects over the past year,” stressed Karbasian, adding that a special delegation will be sent to China to follow up on the opening of the promised letters of credit (LC’s).
Last week, Chinese ambassador to Iran, Peng Sen, promised the IMIDRO head that his country would soon solve the financing problems with the People’s Bank of China, Sinosure, and China Development Bank to help facilitate execution of the steel projects.
The Iranian official further said IMIDRO’s strategy for the upcoming Iranian year (starting on March 21) is focused on attracting private sector’s funds, in line with Article 44 of Iran’s Constitution, which requires the economy to move towards privatization.
