The Iron Ore Producers and Exporters Association of Iran (IROPEX) criticized the government for a 300% increase in mining royalties, mentioning Australia as an example that reduced the mining royalty by 50%, IRNA reported Saturday.
Keivan Jafari, member of the board of directors of IROPEX, said the Australian government decided to reduce the mining royalties in a bid to protect small iron ore mines across Western Australia. Jafari said the private iron ore mines in Iran, which mainly own small and medium mines, expect the ministry of industry, mine and trade to take into account the current critical situation in the global iron ore market and revise the decision over multiplication of the royalties. The ministry is also expected to eliminate the export tariffs for iron ore for the next Iranian calendar year (to start March 21, 2015).
The sharp drop in the global iron ore prices was earlier blamed for the closure of as many as 30 small and medium iron ore mines across the northern half of the country while many other mines had to decrease their production. During the past Iranian calendar year (ended March 20, 2014), some 14 million metric tons of iron ore was produced by the private sector, out of which 12 million metric tons was exported. Australia, as the world’s biggest producer of iron ore, has reduced its iron ore price to less than $70 per metric tons and is also planning to further reduce it to $60 with the aim of eliminating its main rival Brazil from the competition, according to Jaafari.
Brazil’s revenue from exporting iron ore, which was estimated to exceed Iran’s oil revenues, is now seriously endangered and other major iron ore exporters such as Peru, Ukraine, Canada, and South Africa will be also affected by Australia’s move.
The IROPEX member urged the country’s ministry of industry, mine and trade to take the necessary measures to protect small iron ore mines before they are forced to close their mines or declare bankruptcy.
Based on the law passed by the parliament back in February, all mining companies across the country whose exploitation licenses have been issued by the Iranian Mines and Mining Industries Development and Renovation Organization (IMIDRO) are required to deposit 30% of their sales to the treasury. Those companies extracting raw iron ore or those producing iron ore concentrate are subject to the law. From the deposited amounts, up to 6 trillion rials ($222.8 million based on the official exchange rate) could be earned by the ministry of industry, mine and trade. The ministry will then give 90% of the collected sum to the IMIDRO, which is the country’s major state-owned holding company active in the mining sector. The remaining 10% would be offered to the Geological Survey of Iran. The latter is responsible for carrying out geological and mineral investigations throughout the country.
