Economy, Business And Markets

New Era of Foreign Investment in Mining Sector

New Era of  Foreign  Investment in Mining SectorNew Era of  Foreign  Investment in Mining Sector

Global interest in Iran's mining sector has grown especially after Iran and the major powers reached a nuclear understanding earlier this month in the Swiss city of Lausanne, Bloomberg quoted deputy minister of industry, mine, and trade, Mehdi Karbasian, Eghtesadnews reported.

"Numerous financiers from France, Germany, Belgium, UK, Australia, and Canada have so far contacted the IMIDRO, expressing interest in mining projects", said Karbasian during a visit to Iran Alloy Steel Company (IASCO) in the central city of Yazd.

Karbasian, also the head of the Iranian Mines and Mining Industries Development and Renovation Organization (IMIDRO), said he would soon meet with Indian investors as well as financiers from Russia to discuss collaboration in the steel sector.

The nuclear understanding, reached in Lausanne on April 2 between Tehran and the P5+1 countries (the five permanent members of UN Security Council plus Germany) is considered as the first practical step to end decade-long sanctions imposed on Iran over its nuclear energy program. If a final nuclear deal will be clinched by the June 30 deadline, the sanctions imposed by the EU and the US will be lifted and therefore foreign investors can enter Iran's economic scene.

Despite the sanctions, the country's steel sector showed a remarkable growth. Based on statistics released by the World Steel Association, Iran managed to produce 15.4 million metric tons of crude steel in 2014, registering a 6.5% growth compared to 2013. The production growth during the period was more than twice the average global growth of 2.4% in 2014.

Incentives for Foreign Financiers

The IMIDRO chief reiterated that the country provides great incentives to the foreign investors, noting that they can enjoy full ownership of the companies and mineral projects and that the country's regulations protect the foreign financiers' properties and capital. He also mentioned an investment conference, due to be held in May.

The mining companies have been suffering from the lack of modern machinery and equipment as well as restrictions on import of raw material. Experts believe that possible entry of foreign mining companies can remarkably increase the capacities for further extraction and production.

The recent visit of the Turkish President Recep Tayyip Erdogan to Iran was as a good sign for Iranian miners, as they welcomed possible cooperation between the two countries. Although no details have been revealed on the eight collaboration documents signed between the two countries, the mining experts predict a bright perspective for mining cooperation between Tehran and Ankara. As Turkey has close ties with European countries and uses modern technology and technical know-how in its mining sector, experts believe the Turkish contractors can be instrumental in developing Iran's mining industry.

Turkey has been also exporting mineral products to Iran over the past years, according to the head of exploration committee at Iran Mine House, Mohammad-Ja'far Sadeqipanah. "Although we have so far had no mining cooperation with Turkey inside the country, Iran and Turkey are suitable markets for each other due to low transportation costs," said Sadeqipanah, adding that the Turkish mining officials are interested to invest in Iran's mining projects.

The two countries have previously engaged in joint projects in the areas of decorative stones, coal and metals. Expansion of cooperation with Turkey will help Iran find new export markets.

Turkey, a Notable Example

Deputy Chairman of the Iranian Iron Ore Producers and Exporters (IROPEX), Bahram Shakouri says while Turkey has increased its export of decorative stones from $120 million to $5.3 billion within the past 15 years, the figure has barely reached $200 million in Iran from the previous $140 million in the similar period, despite 70% reduction in export tariff for the product.

Shakouri emphasized the need for proper management of resources, saying: "A combination of technology and investment, resources and raw materials, energy, consumption market, and management can guarantee success."