Economy, Business And Markets

15% Growth Predicted for Mining Sector

15% Growth Predicted for Mining Sector15% Growth Predicted for Mining Sector

The deputy minister of industry, mine, and trade has predicted that growth in the mining sector would hit 15% in the new Iranian calendar year (started March 21), Mehr news agency reported.

“While mining sector growth is currently at 10.5%, the figure can increase to 15% based on the plans by the administration and considering the capacities in the mining sector,” said Ja’far Sarqini.

The official stressed that the mining industry, like any other manufacturing sector, will be provided with facilities by banks as well as the National Development Fund of Iran (NDFI) – the country’s sovereign wealth fund. Sarqini added that apart from the NDFI and bank loans, the administration has allocated extra funds to finance the private sector mining companies to carry exploration operations.

  Major Challenges

The deputy minister’s pledge of support comes as the mining companies’ major challenge last year was the banks’ reluctance to provide them with loans. Iranian banks often accept property as collateral for loans, but when the mining companies put forth their mining exploitation licenses as collateral, it is not accepted by the banks.

The lack of liquidity in the mining sector was among the most serious challenges during the past Iranian year (ended March 20). The manufacturing sector should not be dependent on banking system since it does not protect the sector and this will lead to further recession, the Iranian daily Ta’adol quoted Mohammad-Reza Bahraman, the deputy chairman of Iran Mine House, as saying.  

Bahraman also described the mining sector’s performance in increasing the value added and improving employment rate as poor. While the mining sectors of countries such as Canada, Australia, the US and Chile account for around 1.3% of the national workforce, the figure in Iran is around 0.1%. Although the country witnessed a 3.9% employment growth in the mining sector between the Iranian years 1370-1389 (1991-2010), the current 0.1% share of the mining sector in the national employment seems to be meager considering the great potential in the sector.

  Vast Potential

Iran is a mineral-rich country, being among the top ten countries in terms of having mineral resources. It has numerous minerals such as gold, iron, copper, lead, silver, zinc, manganese, tungsten, and molybdenum. According to Bahraman, the key to turn such great potential into satisfying performance is good management.

Iran ranks 10th in the world in terms of producing minerals while it stands 15th in terms of the value of produced minerals. The rank has not improved during the past few years, representing the lack of progress in processing minerals. The country has some 43 billion metric tons of proven mineral reserves, out of which 67% are construction materials, 10% are metals, 19% are non-metals, and the remaining are decorative stones. The metallic mineral reserves mainly include iron and copper ores.

Since the current administration, led by President Hassan Rouhani, came to power, his main focus is concentrated on reviving abandoned mineral and industrial projects. The government has also been willing to take back the mines which were previously transferred to unqualified entities and transfer them to qualified private sector mining firms. According to the industry ministry, the mining sector is expected to improve in the new year.

The most remarkable development in the sector will be the completion of exploration operations on 200,000 square kilometers of the country’s soil to discover new mineral reserves and expand extraction of the existing mines.