Economy, Business And Markets

Setting Up Iron Ore Mine

Setting Up Iron Ore MineSetting Up Iron Ore Mine

Economists and top government officials have unanimously declared the mining sector to be the only sector with enough potential to help the economy move away from overreliance on oil revenues.

As an economic sector favored by the government for revitalizing the troubled economy, the mining sector’s investment potential is at an all-time high.

The Persian daily Forsat-e Emrooz recently published a report on investment opportunities in Iran’s iron ore mines.

According to the report, Iran’s iron ore mines are currently leading the mining sector’s charts in production volume and value, having absorbed the highest amount of investments. However, tons of reserves remain unexplored and unexploited, which is a testament to the sector’ viable investment potential.

“Iron ore mines might just be able to save the economy,” said Mehrdad Akbarian, former chairman of Iran’s Iron Ore Association and current advisor to the deputy minister of industries.

Akbarian believes that the country’s economic development is highly dependent on iron ore, as it is the primary raw material used in steel production.  In his view, the country’s economic growth is tied to the increase in per capita consumption of steel.

  Investment Advantages

According to Akbarian, there are many advantages to investing in Iran’s iron ore mines.

The official said Iran ranks first in the Middle East in terms of mineral reserves and can sustain production for the next 100 years. In fact, the only country that can come close to rival Iran’s iron ore in terms of reserves and quality is Afghanistan, which has been unable to live up to its potential due to the prevailing instability.

Furthermore, Iran provides industries with energy at significantly cheaper prices compared to other mineral-rich countries, which considerably lowers production costs.

“Another major advantage is the government’s commitment to boost the mining sector. This is evident in the goals set for the mining sector in the 2025 Vision Plan,” he said.

Currently, Iran’s iron ore per capita consumption is 250 kg, which is set to reach 350 kg by 2025. Iron ore exports are also to increase accordingly.

Such ambitious goals call for robust efforts to increase production and the government has pledged to support foreign and domestic investors who are willing to invest in the sector.

  Potential Areas of Investment

Akbarian pointed to mineral exploration and iron ore processing as the two most profitable areas for investment.

“Iran’s iron ore reserves are currently estimated at 2.8 billion tons and investments in exploration projects can increase this figure to 5 billion tons,” he said.

He noted that the sector currently suffers from “missing links” in the processing of iron ore and steel production chain, and that investment in pellet production and iron-ore concentrate can be highly profitable as they are required for steel production.

“Some iron ore mines in the country are operating below their capacity due to shortage of liquidity and mismanagement. Investors can take charge of these mines and by increasing the number and quality of the machinery used, bolstering the workforce and providing them with modern technologies, they can reap profits,” he said.

  Investment, Permits Required

According to Akbarian, about $29 million are required for the first phase of setting up an iron ore mine with a capacity of producing 5 million tons of iron ore.

“About $14 million are required for purchasing the machinery such as bulldozers, loaders, trucks and excavators, while 30 workers are needed for working in the mine and 200 more for working in other related areas,” he said.

In order to obtain an iron ore exploration permit, one has to either have a degree in mining engineering or be adequately experienced in the field.

One needs to apply for a permit at the Ministry of Industries, Mining and Trade, which process takes four to six months. Obtaining a business license can also take between six months and a year. It takes about three months to obtain a mining exploitation permit.