Iran Mulls 10% Export Duty on Unprocessed Iron Ore

The Iranian government is considering whether to impose a 10% export duty on unprocessed iron ore, so as to promote the sale of value-added raw materials and steel products.

The measure is expected to come into force from the beginning of the new Iranian year on March 21, 2017, sources said.

“The intention of the government is clear. Export of value-added products means much higher prices and more contribution to GDP [gross domestic product],” a market source told Metal Bulletin.

Metal Bulletin’s Iranian 60% Fe iron ore fines index was $72.65 per ton CFR Chinese ports on January 4. And the weekly index for 65% iron ore pellets was $105.47 per ton CFR Qingdao on January 6.

To encourage sales of processed minerals, the government plans to exempt exporters from paying duties, which currently stand at 15% for pellets and 35% for iron ore concentrate.

Most of the state-owned miners are ready for new measures and are preparing to switch their exports to more valuable materials.

Golgohar Mining and Industrial Company, one of the largest miners in the country, has announced that it is ready to launch the export of iron ore pellets if the export duty is removed.

“China is willing to buy and I received many enquiries during my visit to Dalian,” Keyvan Jafari Tehrani, the head of international affairs at the Iranian Iron Ore Producers and Exporters Association, told Reuters in September.

State-owned miners produced 90% of the 50 million tons of iron ore produced in Iran in 2016 and they have the resources to convert their output into value-added products for export.

However, private miners see the under-utilization of the country’s beneficiation and pelletizing capacities and are not too optimistic about the new regulation.

“As private miners, just like the government, we too understand that selling raw material has much less profit than selling processed materials such as concentrates or pellets. But the time is not right to implement this plan now, since current iron ore production surpasses domestic demand by iron concentrate and pelletizing factories,” said Sajjad Ghoroqi, a member of the Iranian Association of Iron Ore Producers and Exporters, quoted by regional media outlet Al-Monitor.

Over the first nine months of the current Iranian year–from March 21 to December 20, 2016–Iranian miners exported 13.08 million tons of iron ore fines and lumps, which marks a 45% rise year-on-year, according to Iranian customs statistics.

Most of this volume was sold to China.

Iran has the annual capacity to produce 45 million tons of concentrate and 29.5 million tons of pellets.