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Controversy Over Export of Raw Minerals

Controversy Over Export of Raw Minerals Controversy Over Export of Raw Minerals

While the export of raw minerals has for long been the subject of intense scrutiny by government authorities and the parliament, some miners and mining experts believe that the country’s infrastructure cannot process all domestically-produced raw minerals.

While lawmakers consider the export of iron ore, in any form, as an example of selling raw material, which arguably hurts the economy, miners believe each stage of processing low-grade iron ore, such as concentrating and pelletizing, creates a certain degree of value added and therefore should not be regarded as raw export.

“There is a misconception about the definition of raw minerals. In the long chain of processing the iron ore into steel ingot, a certain level of value added is created at each stage, even if the chain is not completed,” Mohammad-Reza Bahraman, the deputy chairman of Iran Mine House, said in an interview with Eghtesadnews.

For example, Bahraman noted that when iron ore is granulated in the first stage of processing, a certain amount of value added is created and therefore it can no more be regarded as raw mineral. However, he added that as the domestic steel sector currently is in need of iron ore pellets, the granulated iron ore should be utilized to produce iron ore pellets, which will ultimately be used in crude steel manufacturing.

“Iran’s Mining Act clearly certifies that the mining companies’ priority should be to supply the processing facilities in their vicinity to the required raw material,” said Bahraman, emphasizing the need to establish a mechanism based on which the producers of raw minerals are compelled to provide the steel sector with the necessary raw materials.

He, however, acknowledged that the mechanism should ensure miners’ profitability when there is no sufficient demand in domestic markets for the mineral products, allowing producers to export the surplus material.

For instance, according to Bahraman, as the domestic decorative stones market is saturated (due to an unprecedented downturn in the housing and construction sectors), the extracting companies are left with no option but to export the extracted stones, and hence should not be blamed for selling the raw material. “As the country lacks the basic infrastructure for processing the decorative stones, there would be no option but to export them,” the official added.

He also criticized the government for failing to develop an appropriate strategy to encourage the production of iron ore pellets by mining companies over the past decade through provision of incentives, tax rebates or the like. “The outcome of such mismanagement is the import of at least 6 million metric tons of iron ore pellet per year,” said Bahraman.

He welcomed the policies pursued by the current administration to lower the tariffs on the import of iron ore pellet, recalling that the high import tariffs under the former administration harmed many steel manufacturers.

Experts in the mining sector believe that exchange of ideas between the decision-makers and the producers is the key factor for regulating the market and developing a proper strategy for mineral production.

Financialtribune.com