Mineral Prospects Shine

Deputy Industries Minister Mehdi Karbasian, who is also chairman of the Iranian Mines and Mining Industries Development and Renovation Organization, recently exchanged views on a wide range of mining issues.

In an interview with Iran International Magazine, Karbasian reviewed the country’s mineral prospects with regard to global developments in the field of economy. Excerpts follow:

- In the opinion of experts, one of the sectors that can play a significant role in the acceleration of economic growth in an economy without sanctions is the mining sector. Have we been able to take advantage of this opportunity in the post-JCPOA era and attract foreign investment?

Prior to the JCPOA, none of the countries, especially the Europeans, Australians and the Asians, would cooperate with Iran because the export guarantee funds of those countries were Iran’s creditors and somehow Iran had failed to fulfill its commitment to them in connection with the settlement of accounts.

On the other hand, this had caused those guarantee funds not to allow their companies to cooperate with Iran in the field of economy.

But during President Rouhani’s visits to Europe, Italy’s export credit agency, SACE, and France’s export credit agency, COFACE, announced that they would support foreign investment in Iran.

Other countries following suit were Germany, Korea Trade Insurance Corporation and Japan credit insurance agencies. Other countries in their subsequent visits all announced readiness to support investments in Iranian projects.

Obviously, in relation to finance, there is a problem. International bankers and major banks have said that a paragraph should be added to the contract with guarantee funds between the Central Bank and those banks. The Iranian government has not accepted the proposal and this has slowed down the progress.

Fortunately, we have been recently informed that mechanisms are being devised by the European Union. In a recent meeting between Abbas Araqchi (deputy foreign minister) and Federica Mogherini (the high EU representative for foreign affairs), the issue has been discussed and we hope that with the consultations done, the trend of the settlement of the issue will be accelerated.

- Has there been any new investment in this area?

Among our new investment projects is Makran region, which were launched during the president’s visit to Sistan-Baluchestan Province. This two-phase project will be implemented in Chabahar with a capacity of three million tons.

In a trip to Japan together with Zarif (Iran’s foreign minister) during which we met and conferred with the Japanese minister of industry and trade, it was decided that a credit line of  $100 million will be provided by the “Kobe Steel” Company, the final stage of which is being followed up by the Ministry of Economy. 

In addition, the signing of a deal for “Ardakan Graphite Electrode” was finalized, which had remained unfinished for years. In this regard, a contract was signed with the Germans and the Italians for the supply of equipment for this project, which will be in the form of a loan of €50 million to be repaid in two to three years, which was finalized and signed.

- Can the projects under implementation be supplied to the present market at competitive prices under the conditions described?

In the past year, about 4 million tons of steel were exported and it is predicted that this year a record of more than 5 million tons could be achieved. The issue is practical under conditions that China’s dumping and global market recessions still exist and despite all these issues, we have continued our activities and will do so in future. This has two reasons: in relation to steel, Iran has three main advantages. While many countries do not possess iron ore, Iran has iron ore.

On the other hand, Iran has inexpensive gas which reduces the finished price of steel and in the field of steel, talented experts have been trained in recent years. Therefore, if we pay increased attention to the infrastructures, especially in the field of transportation, it is predicted that we would be able to compete at the regional level.

In the meantime, we should admit that Iran has a population of 80 million and if it comes out of recession and moves toward prosperity, people can move toward reconstruction and renovation of the country.

In the housing sector, steel consumption can increase from the present 210 kilos to at least 350 kilos and to this end domestic consumption will improve as well.

- In your opinion, if we reach the capacity of 55 million tons, to what extent we will have the iron ore problem and what is IMIDRO’s plan to handle the issue? At present the iron ore production capacity is about 50 to 60 million tons but for the production of 55 million tons steel, we need 160 million tons of iron ore.

This question is very specialized and correct, and should be seen whether we have thought about it or not. In this regard, IMIDRO has started 250,000 km of expanded exploratory work and good news is expected in this connection.

So far and during the past eight months, we have definitely gained access to 400 million tons of new iron ore reserves.

During the past two years, close to 200 million tons in Sangan have been added to our definite reserves and we have launched a widespread exploratory work in Bahrame Goor region in Fars Province.

Also, in an extensive work in Gol Gohar, phases 7 and 9 have been started and phases 5 and 6 have been delegated and are nearing operation. The process is the same in the area of the central plateau.

Our forecast is that due to the richness of the country in the field of iron ore reserves, exploratory operations should be accelerated.

We hope some budgetary assistance to be given to IMIDRO, so that we could take greater strides in the field of mine development. Our proposal to the Majlis was increase in the budget and we hoped that the parliament would approve it in the sixth plan [2017-22] but it did not. We still hope that it will approve it in the next year’s budget.