Economy, Business And Markets

Iran to Halt Export of Iron Ore, Ship Pellets Instead

Iran to Halt Export of Iron Ore, Ship Pellets InsteadIran to Halt Export of Iron Ore, Ship Pellets Instead

Iran is planning to halt the export of raw iron ore from March 2017 and instead sell the processed form of the steelmaking ingredient to maximize returns as low prices prevail, an industry official said on Friday.

Currently exporting iron ore fines and lumps, Iran is the sixth biggest supplier of the commodity to top market China, although its shipments are a fraction of those exported by Australia and Brazil that together accounted for 83% of China’s January-August imports.

“The reason is clear. Iran prefers to export value-added products with much higher prices,” Keyvan Ja’fari Tehrani, the head of international affairs at Iranian Iron Ore Producers and Exporters Association, told Reuters on the sidelines of an industry conference in the Chinese port city of Dalian, Indian daily newspaper The Indian Express reported on its website.

Iron ore prices have fallen to below $60 a ton, currently from a record near $200 in 2011 amid a glut that has forced many low-grade producers, including those in Iran, to shut.

“The number of iron ore mines in Iran has dropped from 200 to 20 in 2013,” Tehrani said.

“Iran’s Golgohar Mining and Industry Company is expected to start running its 5-million-ton a year pelletizing plant by the fourth quarter of 2016.”

Golgohar is negotiating with the Iranian government to remove a 30% export duty on pellets so it can sell around 1-2 million tons of iron ore pellets by the start of the next Iranian year on March 21, 2017.

“China is willing to buy and I received too many inquiries during my current visit to Dalian,” he added.

Tehrani noted that Iran used to import 7-8 million tons of pellets a year, with a total domestic demand of 28-29 million tons, but the new supplies should end the country’s reliance on overseas purchases and flip it into an exporter, amid slow domestic steel demand.

State-run Indian company KIOCL said in February it was considering building an iron ore pellet complex in Iran at a cost of about $59 million and was in talks to sell more than 2 million tons of the steelmaking raw material to Tehran.

Tehrani said there has been no development so far on KIOCL’s plan for a pelletizing plant.

Iran, after being freed from most western-imposed trade sanctions earlier this year, is looking to do more business globally. It is aiming to attract $29 billion in investment into its mining sector and boost its crude steel production to 55 million tons by 2025 from around 16 million tons now.