Economy, Business And Markets

End of Ice Age in Mining Industry

End of Ice Age  in Mining IndustryEnd of Ice Age  in Mining Industry

Several foreign investors have expressed interest in making investments in mineral industries of Iran. It is, however, necessary to identify the comparative advantage of the industry, so that such opportunities are effectively utilized, Eghtesad News reported.

In recent years, western sanctions–imposed against Iran over its nuclear energy program–have paved the way for rival countries such as Turkey and China to seize the export markets of Iran in several sectors. Many analysts believe that once sanctions are lifted, the pressure on import and export will reduce and mineral industries will get the chance to focus on technology upgrade.

The interim nuclear agreement between Iran and the world powers back in late 2014 initiated a wave of interest among several foreign countries in mineral industries of Iran. It seems that the final nuclear deal will help channel both domestic and foreign investments toward the sector.


Apart from the adverse impacts of the sanctions against Iran, the steel sector grappled the most with falling demand and slipping global prices. Local steelmakers particularly struggled with record levels of cut-price steel from China that forced them to sell their products with large discounts in domestic markets. The crisis further triggered protectionist measures like higher duties on steel imports.

The ensuing surplus in the domestic steel sector can be seen as an opportunity to export to the regional, European or even American markets. That is why major local players have tried to double steel production despite certain problems on the way, namely locating steel plants and procuring raw material.

Since the incumbent administration seeks to reduce raw material exports, it is high time to target investment in mineral plants with high potential to produce value-added minerals. Many iron ore miners have already started to upgrade technology to fully process the minerals in their plants. The efforts, according to several analysts, will be further facilitated by the removal of sanctions.

The underdevelopment of mining sector is more than anything attributed to passive collaboration with foreign countries, which has been intensified by difficulties of money transfer caused by sanctions. Falling global prices, in the meantime, has contributed to the recession in Iran’s iron ore industry by loosening the grip on export markets dominated by other mineral-rich countries.


Technology upgrade in coal mining also requires immediate attention. At the present, investment in coal mines is marked by low returns as traditional mining methods and unskilled labor force have dramatically increased the final costs, leaving coal miners in loss. Nevertheless, an easing of sanctions and improved economic relations are expected to redress the situation, as interested European countries can exploit the untapped coal mines using the advanced technologies at their disposal.


Having successfully exported surplus cement, local analysts propose the stone sector as the next priority.

Low demand and recession have pushed many stone-cutting plants in the country to shut down while decorative stones are undoubtedly an area with significant comparative advantage in the stone sector. In the meantime, other countries like Turkey have succeeded in replacing Iran in major export markets amid western sanctions and lack of proper planning.

The final nuclear deal and the ensuing removal of sanctions provide an opportunity to direct local and foreign investment toward stone mines and processing plants. In addition, policies should be adopted for effective branding and export of stones. However, it is also important to adopt a strategy to properly introduce local players to foreign companies.

  Rare Earth Elements

The Iranian Mines and Mining Industries Development and Renovation Organization has recently embarked on exploring rare earth elements, which is witnessing a growing demand in high-tech industries all over the world. It is, therefore, necessary to take measures to direct investment toward the sector and localize the relevant production technology.

Clearly, the easing of sanctions will boost mining cooperation with Italian, German and even US companies that have reportedly met with an Iranian mining association for possible investment in the copper industry of Iran.

In recent years, western investors and buyers have shown interest in eastern countries, including Russia, China and Kazakhstan, that have recorded the highest number of deals in the mineral industry.

Time will tell which sectors of the mining industry of Iran could grab the attention of foreign players once sanctions against the country are removed. In addition, it is yet to be seen if the investment environment of Iran allows for the execution of prospective contracts with foreign investors.