Economy, Business And Markets

Iron Ore Mines Struggling to Keep Head Above Water

Iron Ore Mines Struggling to Keep Head Above WaterIron Ore Mines Struggling to Keep Head Above Water

Chadormalu Industrial and Mining Company must pay an aggregated $565 million in mining royalties and usufruct to the government for the 2013-16 period, says managing director of the company.

Mohammad Nourian added that these are troubled times for the mining sector, as the unprecedented slump in iron ore prices and steel demand has brought most Iranian mines and steel mills to the brink of bankruptcy.

Last Iranian year (March 2013-14), the parliament passed a law for curbing raw exports. Subsequently, miners were required to pay up to 25% of their mining revenues to the Iranian Mines and Mining Industries Development and Renovation Organization—a major state-owned holding company active in the mining sector.

The law stipulated that the mining usufruct fee will decrease to 21.5% if iron ore is processed into concentrate, while the figure will decline further to 18% if the concentrate is processed to iron ore pellet.

Miners only have to pay 15% in mining usufruct fee if they continue the process and produce sponge iron—the input for a steel plant.

The law was revised later so that a 30% duty was imposed and the figure dropped down to 18% for pellets, 25% for granulated iron ore, 21% for iron ore concentrate and 16% for sponge iron ore in 2015.

Chadormalu Industrial and Mining Company—established in 1999—is located in Yazd Province and currently produces 10.5 million tons of iron ore concentrates, 3.4 million tons of pellets and 2 million tons of steel per year.

Meanwhile, Band-e-Narges Badroud Iron Mine was closed on Sunday due to the plummeting global iron ore prices and the high production costs of this mineral, announced the director of the mine.

Hamidreza Haqqanifar added that the mine is grappling with close to $150,000 in losses every day for the last couple of months.

The Kashan-based mine produced close to 700 tons of iron ore daily and had created employment opportunities for more than 2,500 people.