Iran’s iron ore exports may stop in 2019 due to low prices and as it consumes more of the raw material in its bid to more than triple steel production by 2025, said an industry executive from the country.
From 23.6 million tons in 2013, Iran’s iron ore shipments are likely to drop to 15-16 million tons this year and to less than 10 million tons by 2017, Keyvan Jafari Tehrani from the Iron Ore Producers and Exporters Association of Iran (IROPEX) was quoted by Reuters as saying.
“And maybe from 2019 onwards, there will be no quantity to export from Iran,” said Tehrani, who oversees international affairs at IROPEX, on the sidelines of an industry conference in the Chinese city of Qingdao.
Iran exported 22 million tons of iron ore in 2014, the ninth biggest in the world, according to data from the International Steel Statistics Bureau. But that was just a fraction of the 754 million tons from top shipper Australia.
A 60% slide in iron ore prices over the past two years has shut higher cost mines globally, including many in Iran, leaving a big chunk of the Chinese market—the largest for the raw material—to low-cost suppliers from Australia and Brazil.
From around $57 a ton currently, analysts polled by Reuters expect iron ore to average $50 over the next two years amid signals that steel demand in China has peaked or is close to peaking.
Iran’s exports of the bulk commodity to China fell nearly 50% to just over 8 million tons in January-August, based on Chinese customs data.
Iran also needs more iron ore at home as it plans to lift steel output to 55 million tons by 2025 from 16.3 million tons last year.
“That goal would need 159 million tons of iron ore a year,” said Tehrani, with last year’s production only reaching 45 million tons.
Iran is seeking foreign investment to help extract more iron ore, with domestic reserves at 2.5 billion tons, nearly triple South Africa’s, one of the world’s main producers, according to the US Geological Survey.
“We have enough reserves. What we need is new machinery, new technology, more investment,” said Sajjad Ghoroqi, a member of the IROPEX board.
Data from IROPEX and Iranian Mines and Mining Industries Development and Renovation Organization put the country’s iron ore reserves at 5.2 billion tons.
The removal of economic sanctions on Iran, possibly by next year following a deal with the West over its nuclear program, is seen encouraging foreign business into the country, although most prospective investors remain cautious.
“Most of them are waiting to see what will happen post-sanctions,” said Tehrani.
