Economy, Domestic Economy

Need for Business Partners

Need for Business PartnersNeed for Business Partners

Finnish Outotec Company’s announcement that it is willing to provide technologies and services to Iran’s mining and mineral processing industries was a much talked about event in Iran’s mining sector in the previous week. While cooperation with international companies such as Outotec could help accelerate Iran’s mining sector development, experts say the nature of these collaborations is not beneficial for Iran.

Representatives from Outotec Company’s Middle East office met with the chairman of Iranian Mines and Mining Industries Development and Renovation Organization (IMIDRO) last week to discuss the conditions of their cooperation.

Thomas Schwalm, the managing director of Outotec’s Middle East branch said his company holds the potential and technical capabilities for providing technology services in the mineral industry sector as he announced Outotec’s readiness for supporting and participating in IMIDRO’s mining projects, the Persian daily Ta’adol reported citing the IMIDRO website.

Outotec Company had previously been active in a number of mining projects in Iran even as many foreign companies were forced to pull out of Iran after economic sanctions against Tehran intensified. The Finnish company has a regional office in Tehran which facilitates the technical and economic relations between the two sides.

Mehdi Karbasian, IMIDRO’s chairman, said the recent cooperation between the two sides will include projects in the field of steel, iron ore, copper and aluminum, preliminary design of mineral processing plants and implementation of projects in the field of titanium, naphylene synth, petroleum coke, etc.

Reza Ashraf Semnani, managing director of Iran’s non-oil drilling union, noted that whether or not such collaborations would prove beneficial for Iran depends on how much experience and technical knowledge is gained through them. With lack of sufficient technical knowledge and expertise in the country, advanced industrial plants built by foreign companies “cannot achieve sustained profitability,” he said.

A member of Iranian Steel Producers Association, Seyed Reza Shahrestani, also pointed out that the cooperative agreements with foreign companies could be a win-win deal only if the foreign companies finance the projects, since otherwise they would only lead to further depletion of the country’s foreign exchange resources.

Pointing that some Chinese and Indian companies had also offered to participate in Iran’s mining projects in return for Iran’s due oil payments, he said such collaborations are not profitable for Iran since they reduce Iran’s foreign currency earnings. “The foreign party must finance the projects so as to share in the profits and losses of the projects,” Shahrestani noted.

Overall it appears that before rushing into contracts with foreign companies to build advanced factories in the mining sector, Iran needs to be looking for business partners to invest in the mining projects. This scenario would prove beneficial for both parties since the foreign investors could partake in profits made while the Iranians could use the opportunity to improve their technical knowledge, without any further foreign currency leaving the country.