In late May, the Iranian mining industry gathered for a conference in Tehran. Almost 300 local companies came to the Iran Mines & Mining Industries Summit, which gives an indication of the size of the industry. But more importantly, delegates from several dozen international companies were also there from Germany, Australia, China and India.
Mining is one of the industries in the Islamic Republic that could really benefit from more foreign involvement, in terms of money and expertise. According to Turquoise Partners, a Tehran-based investment house, Iran’s mining sector is struggling with problems on many fronts, ranging from outdated technology to a shortage of finance and a lack of research capabilities, MEED.com, a self-proclaimed “business intelligence for the Middle East” reported.
“The mining sector has a lot of potential due to the country’s sizable reserves and relative proximity to large consumers,” the group said in a report published in February. “However, it suffers from a lack of investment in technology, infrastructure, and research and development. The sector could benefit from massive investment, which would stimulate other related sectors as well.”
The scale of the investment needed is daunting. In the government’s sixth five-year economic development plan, which runs from 2016 to 2021, some $15 billion of spending are earmarked for the mining industry to boost output of steel, copper and aluminum. But that forms just part of what the government would like to achieve.
Iranian Mining Industries Development & Renovation Organization, the state-owned body responsible for the sector, has been involved in $10 billion worth of projects since it was set up in 2010, but its future plans far outstrip that. IMIDRO says it needs to raise about $40 billion of finance to meet its targets for 2025. These include producing 55 million tons of steel, 1.5 million tons of aluminum and 800,000 tons of copper cathode by that date–fourfold and fivefold increases on what the country produces at the moment respectively.
Attracting international companies into the market would be one way of meeting the investment shortfall. As the presence of companies at the conference shows, many foreign firms are well aware of the opportunities on offer. The problem, as ever for Iran, is how to persuade them to enter the market.
