Economy, Domestic Economy

Iran: A Force to Be Reckoned With

Iran: A Force to Be Reckoned WithIran: A Force to Be Reckoned With

American multinational financial services corporation Morgan Stanley has described Iran as the last large, modern, educated economy that is locked out of the global system, and the biggest one to reenter it since the end of the Cold War.

On top of that, it’s the most literate nation in the region, a largely urbanized country where 60% of the population are under 30. The potential for an economic upswing when the sanctions are lifted is pretty clear, Business Insider cited a recent analysis by the corporation.

In many respects, there is no direct comparator for Iran, given its economic size, the scale of the sanctions imposed and its political structure. In particular, the prospective reintegration of Iran into the global economy is arguably uncharted territory in that there is no other hydrocarbon frontier economy that has been subjected to comparable economic and political sanctions.

In the next few years, there are some pretty rapid growth forecasts for Iran—the World Bank expects gross domestic product growth to rise to 6.7% in 2017, largely on the back of increased production of oil and natural gas.

  Big Mining Potential

Iran ranks high on the list of countries with large proven oil and natural gas reserves. But perhaps less known is the country’s substantial and largely untapped, mineral resources.

As the global community starts slowly lifting sanctions on the Islamic Republic, foreign mining companies may find a big opportunity in Iran, according to Morgan Stanley.

Indeed, Morgan notes Iran has the world’s largest reserves of zinc and the second-largest reserves of copper.

To date, much of Iran’s mining sector has focused on its energy industry, leaving minerals “largely underdeveloped”, the Financial Times quoted Morgan as saying.

The country already has the mining capability for “iron ore, metalliferous ores and building raw materials such as sand, clays, gravel”.

Even now, Iran currently delivers 2-9% of the world’s total supply of gypsum, barite, feldspar, nitrogen and sulfur, and 1-2% of total supply of cement, iron ore, molybdenum and silica sand.

The government has owned essentially all of Iran’s mining assets until the last decade, Morgan said, adding that “industry controls are being eased”.

As part of a deal struck in July between Iran and world powers, Iran is limiting the scope of its nuclear program in exchange for the West to remove its economic sanctions against the country, which is widely expected to happen in early 2016.