Economy, Business And Markets

Setting the Stage for Foreign Investments in Mining

Setting the Stage for Foreign Investments in Mining Setting the Stage for Foreign Investments in Mining

Last week, deputy minister of industry, mine, and trade Mehdi Karbasian informed the media that as many as 15 countries have made serious offers to invest in Iran’s mining and minerals sectors, mostly through multinational firms.

It is evident that Iran presents numerous advantages in the industrial and mining sectors including but not limited to the country’s strategic location, abundant resources of energy as well as educated but inexpensive labor force.

However it is of paramount importance to ask what the country can gain from all these investment bids, Eghtesad-News reported.

Before a framework nuclear agreement was reached between Iran and the world powers in the Swiss city of Lausanne on April 2, a number of foreign companies had signed agreements to invest in Iran’s mining sector. The multinational ANC, for instance, had agreed to build a coal processing facility near the eastern city of Tabas. A Chinese firm had also invested €350 million in the southeastern city of Rafsanjan in Kerman Province to produce ferrochrome and ferromanganese.  

Domestic mining firms view foreign investment as crucial in upgrading the traditional mining techniques and acquiring modern technology and machinery.

The recent offers from countries such as Germany, Denmark, Belgium, Canada, France, and Australia are glad tidings for those involved in exploration operations and mineral industries. Nonetheless, such finances cannot be injected into the mining sector before the issues regarding money transfer are solved, which is in turn pending a final nuclear deal and the removal of anti-Iran sanctions. Until then, foreign investors are not expected to ink any official deal.

Experts, on the other hand, warn that any contract and agreement should be transparent and that the Iranian side should sagaciously take into account the national interests. The administration is strongly urged by experts to refrain from international cooperation on unprocessed minerals, and instead stay focused on collaborations in explorations and processing phases. They argue that if the industrial officials are happy with only extracting minerals and creating little value added, none of the foreign offers deserve consideration.

They believe the foreign firms’ offers should only be taken seriously if cooperation on processing the minerals is on the agenda. In that case, the multinationals would be able to bring about the positive changes in the long-forsaken mining sector.

Despite the new opportunities the multinationals can provide, there is always the risk of tax evasion on the part of the foreign investors in addition to national interests of the country of origin being overlooked if the contracts are not transparent and binding.