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Coal Industry Future Looks Dark

Iran’s coal reserves are estimated at over 5 billion tons, while proven reserves stand at about 630 million tons.Iran’s coal reserves are estimated at over 5 billion tons, while proven reserves stand at about 630 million tons.

The 3rd National Iranian Coal Congress ended in Semnan Province last week. The two-day event was organized with the aim of bringing together producers, industry researchers and academia to discuss and address the pressing issues facing the domestic coal sector.  

The event was attended by experts from Brazil, Australia, Georgia, Russia, the UK, Ukraine and Spain, Mehr News Agency reported.

The coal sector plays a crucial role in the steel production chain as it is the primary feedstock for steel mills. Iran has said that it aims to become the world’s sixth largest steel producer by 2025, as per the 20-Year National Vision. The plan stipulates production of 55 million tons of crude steel per year, which in turn requires 3.2 million tons of coking coal and 4.5 million tons of coal concentrate.

However, the coal sector’s unskilled workforce, lack of access to modern extraction, exploration and processing technology, lack of liquidity and rampant imports make the ambitious target a more serious challenge.

Iran’s coal reserves are estimated at over 5 billion tons, while proven reserves stand at about 630 million tons, according to the Ministry of Industries, Mining and Trade.

The sector faces a serious shortage of experts as many Iranian industrial universities have removed coal extraction courses from their curriculum, said former managing director of Esfahan Steel Company and CEO of Shomalshargh Shahrood Industrial and Mining Company, Ardashir Sadmohammadi on the sidelines of the expo.

He rued that coal mining internships and mine safety classes are also no longer offered as specialized courses. This is while 25% of Iran’s mining casualties occur in the coal mines deep down in the ground.

“We cannot expect a bright future for the coal industry if we do not train experts and encourage them to work in the sector,” he said.

Producers, in the meantime, are grappling with liquidity issues as coal prices have remained unchanged for the past two years, said head of Iran Mining House’s Coal Commission, Mohammad Mojtahedi.

“Coal miners are incurring losses and downsizing to be able to survive,” the official noted.

Minister of Industries, Mining and Trade Mohammadreza Nematzadeh and Minister of Cooperatives, Labor and Social Affairs Ali Rabiei signed a directive last year calling for a 14% hike in coal purchase prices. According to Mojtahedi, no effort has been made so far to implement the directive. This is while Esfahan Steel Company, which purchases 95% of domestic coal production, effectively sets the prices and prevents them from rising.

In the meantime, shrinking profits have prevented producers from gaining access to modern exploration and extraction machinery, advanced mineral data modeling and processing software, and modern safety equipment. This in turn has impeded the industry’s growth, says the head of Semnan Province’s Science and Technology Park, Esmail Jalali.

Despite great potential in the sector, these obstacles have pushed Iran to import huge quantities of coal from Australia and Indonesia, among other countries, in recent years. Over 2.5 billion tons of coal was imported in the past fiscal year that ended in March.

Financialtribune.com