Outlook for Semi-Fabricated Copper Production, Export

The outlook for the production and exports of Iran’s semi-fabricated copper products was presented by Saad Abdi, the National Iranian Copper Industries Company’s planning and supervision manager, at the 48th meeting of the International Copper Study Group in Portugal late last year.

NICICO and other Iranian producers intend to boost production and exports by 2020, considering the subdued demand at home. Most producers seem to be targeting regional markets, while more ambitious plants have set their sights farther on other continents.

Iran boasts of significant advantages in the mining sector. It has easy access to raw materials as it operates several world-class mines, enjoys a strategic proximity to countries with high demand for minerals, especially copper, utilizes relatively cheap energy and has a large population of young, expert workforce.

ICSG is an intergovernmental organization that serves to increase copper market transparency and promote international cooperation on issues related to copper. It is the only forum solely dedicated to copper where the industry, its associations and governments can meet and discuss common problems and objectives.

  Production and Exports Forecast

NICICO forecasts Iran’s total copper semis production to stand at around 400,000 tons in 2020, up from about 268,000 tons in 2015.

A significant share of the products, considering the lack of robust local demand for copper, are to be exported to Persian Gulf littoral states, China, North African countries such as Chad, European consumers such as France, and Northern America.

Iran’s copper and copper alloy semi-fabricated products are divided into four groups of wire rods, RBS (rods, bars and sections), tubes (tubes and pipes) and PSSF (plate, sheet, strip and foil).

In downstream copper industries, wire rods have the largest share of production and consumption. As of 2015, Iranian producers had the capacity to produce 647,000 tons of wire rods per year.

NICICO stood at the top with 170,000 tons/year, followed by Copper World Company with 107,000 tons, Kaveh Copper Industries Company with 88,000 tons, Mesbar Kaveh Company with 25,000 tons, Meskaran Alyazh Kimia Company with 19,000 tons, Ofogh Alborz Company with 10,000 tons and other companies with 228,000 tons.

Wire rod exports had a significant growth in the last few years, as they jumped by 10,000 tons between 2010 and 2015, and are expected to reach 27,000 tons in 2020.

Copper RBS, also known as Busbar, are mainly used for electronic purposes in energy, engineering and construction industries. Their consumption is especially high in electricity production.

Iran’s main RBS producers are Copper and Copper Alloys Semi-Finished Products Company (locally known as Shahid Bahonar Copper Company), Mesbar Kaveh Company and Electro Mes Company.

NICICO forecasts a declining export trend for RBS, reaching 276 tons in 2020 from a well-maintained average of 450 tons for the last 10 years.

Iranian plants produce copper tubes in the forms of pancake, level wound coil, or straight tube.

Tube manufacturers include Ghaem Copper Company, Mehr Asl Copper Company, CSP and Shahr-e-Babak Copper Tubes Company (a subsidiary of NICICO).

Copper tube exports have experienced a positive trend in the past few years. The combined force of four manufacturers coupled with the supply deficit in the region enabled Iranian producers to seize a sizable share in regional markets. Tube shipments’ main destinations are Turkey and most exports are undertaken by Ghaem Copper and Mehr Asl.

According to NICICO, Shahr-e-Babak also intends to boost copper tube exports to Persian Gulf littoral countries with demands exceeding 40,000 tons.

Copper tube exports are forecast to reach 17,330 tons in 2020 from around 12,000 in 2015. Copper alloy tube exports, however, is close to zero due to limited output and unlikely to grow.

Copper plates, sheets, strips and foils are the common names of products manufactured through rolling technologies. PSSF is the fourth most consumed copper semi-fabricated commodity in the world.

Iran’s two main sheet manufacturers are CSP and Yazd Metallurgy Industries. Sheet exports are expected to reach 4,300 and 4,600 tons for copper and alloy sheets respectively by 2020.

Based on NICICO’s estimations, the total exports of all copper semis will reach 53,500 tons in 2020.

Moreover, domestic demand for copper semis is set to reach 292,500 tons in 2020, which is equivalent to 262,900 tons of copper content. Forecasts indicate a decline in wire rod and alloy sheet demand in the country, while other commodities will be on the rise.

  Iran’s Copper Industry Profile

Certain parts of Iran are located on theTethyan Metallogenic Belt, one of the world’s largest mineral belts that stretches over 12,000 kilometers. It passes through Romania, Serbia, Bulgaria, Turkey, Iran, Afghanistan, Pakistan, the Tibetan plateau of China, Burma, Indonesia and Iran.

National Iranian Copper Industries Company is already following extensive exploration operations in the provinces of East Azarbaijan, Ardabil, South Khorasan, Sistan-Baluchestan, Kerman, Isfahan and Yazd, where the metallogenic belt passes through.

The Canada-based Anglo American Exploration and University of British Columbia have started copper exploration operations in 22 mineral zones located in the Iranian provinces of East and West Azarbaijan, Ardabil and Zanjan, the head of explorations at NICICO, Babak Babaye, announced recently. The operations are scheduled to continue until May 16.

Canadian experts had first visited the zones back in August 2016 for preliminary explorations.

As of 2014, NICICO was the world’s ninth largest company in terms of copper reserves, as it controlled 3.48% of global deposits of the mineral. As Iran’s primary copper mining company and holding, almost all producers in the country operate under its shadow.

NICICO operates the world’s second largest and the Middle East’s largest open-pit copper mine, Sarcheshmeh. The mine possesses over 826 million tons of proven and 1.2 billion tons of estimated copper reserves, alongside substantial amounts of mineral such as molybdenum, gold and rare metals.

The mine was first discovered in 1928, but it was not until nearly 40 years later that detailed exploration projects were undertaken. In 1967, Kerman Copper Industries Company was established in partnership with a British firm, which led to the discovery of 400 million tons of copper reserves. It lacked the means and the financial capability to operate the mine and was, therefore, purchased by the government.

In the early 1970s, state-owned Sarcheshmeh Copper Mines Corporation took over the mine and approached the American Anaconda Copper Mining Company to utilize its expertise in copper mining.

The copper complex was established and production kicked off up until the victory of the Islamic Revolution in 1979, which brought about the nationalization of SCMC and Anaconda’s assets and the establishment of NICICO.

NICICO’s other mines include Sungun Copper Mine in northwestern Iran, Taft, Miduk, Chahmesi and Chahfiroozeh mines in central Iran, Daraloo Mine in the south and Chehelkoureh Mine in southeast.

Its plants in Kerman Province include Sarcheshmeh and Miduk concentration plants with 800,000 tons/year capacity, Sarcheshmeh Molybdenum plant with 7,000 tons/year, Sarcheshmeh and Miduk SX-EW plants with 13,000 tons/year capacity, Sarcheshmeh and Khatoonabad smelter plants with 250,000 tons/year capacity, Sarcheshmeh Sulfuric Acid Plant with 100,000 tons/year capacity, Sarcheshmeh Refinery Plant with 240,000 tons/year capacity, Khatoonabad Refinery Plant with 200,000 tons/year capacity, Sarcheshmeh wire rod, slab and billet casting plants with 180,000 tons/year capacity.

And in Azarbaijan region, NICICO operates Sungun Copper Concentration Plant with 300,000 tons/year capacity and Sungun Molybdenum Plant with 3,300 tons/year capacity.

  Global Copper Market Forecast

According to ICSG, after a growth of almost 6% in 2016 because of new and expanded capacity brought on stream mainly in Mexico and Peru, and the low frequency of supply disruptions, world copper ore production is expected to decline by 1% in 2017 and remain essentially the same in 2018.

The decline will mostly be due to lack of significant output from new projects or expansions and reduced output from major miners as well as supply disruptions that occurred in the first quarter of 2017 in Chile, Indonesia and Peru.

On the other hand, world refined copper production is expected to increase by around 2% in 2017 with lower growth of about 1.5% expected in 2018, as China remains the world’s biggest contributor to global production growth in 2017-18.

The world apparent refined usage is also expected to increase by around 2% in 2017-18. Sustained growth in demand is expected to continue because copper is essential to economic activity and even more to the modern technological society.

Infrastructural development in major countries like China and India will continue to sustain growth in copper demand.