Economy, Business And Markets

Gov’t Mulling Iron Ore Price Liberalization

 Gov’t Mulling Iron Ore Price Liberalization
 Gov’t Mulling Iron Ore Price Liberalization

The Iranian Mines and Mining Industries Development and Renovation Organization (IMIDRO) says it has advised the ministry of industry, mines, and trade to liberalize iron ore prices, reported Fooladnews.

IMIDRO, as the biggest producer and exporter of iron ore in the country, thinks the iron ore prices should be liberalized in light of the substantial jump in iron ore prices during the past Iranian calendar year – which ended March 20, 2014 – said Mehdi Karbasian, the IMIDRO head.

Ministry officials say they are not insisting that iron ore prices should be brought under control, adding that liberalization should not lead to the closure of iron ore manufacturing plants.

Earlier this year, Jafar Sarqini, the deputy minister, said liberalization of iron ore prices cannot take place overnight. He noted that if the administration comes to a final conclusion over the export duties for iron ore and also the usage of iron ore mines, it would not interfere with ore prices for a minimum of three years.

Iron ore mine owners believe liberalization of prices should be a priority because the income and costs in the sector need to be proportional to one another.

Global analysts forecast that iron ore prices will plummet to less than $60 a ton next year as global supply increases and demand remains weak.

The raw material will average $72 a ton in the first three months of 2015, down from an earlier forecast of $82, according to Ivan Szpakowski, an analyst in Hong Kong.

Iron ore plunged 44% this year to a five-year low as surging supplies from Brazil’s Vale SA and BHP Billiton Ltd. and Rio Tinto Group in Australia created a glut just as China’s economy slowed. The global surplus will more than double next year, according to Australia and New Zealand Banking Group Ltd (ANZ).

Iron ore has been among the hardest hit industrial commodities in Iran, with prices falling more than a quarter this year. After breaching $100 a ton in May for the first time since September 2012, prices fell as far as $89 in mid-June before recovering to $98 in July.

Based on the US Geological Survey, Iran is among the ten largest producers of iron ore.

Chadormalu and Gol-e Gohar are the country’s largest iron ore mines, accounting for more than 80% of national production.