IMIDRO Exclusive

he share of mineral products and industries The Iranian Tis up to six per cent of government had the gross domestic product (GDP), of which one percent- raised an issue age belongs to mines and five percent to the industry. according to In most developed coun- which the Chinese tries, this share is between 16 and 40 percent of the GDP of government had those countries, while is to take measures in the 9th place among mineral producers; it ranks for the opening of 15th in terms of the diversity of LCs at least twice mineral products with over 60 types of products. as much as the Addressing a news con- Iranian money ference, Dr. Mehdi Karbasian, Deputy Minister of Industry, held by China. Mines and Trade and Man- aging Director of the Iranian situation, this figure will help Mines and Mining Industries improve the economy and for Development and Renovation the same reason, its reduction Organization (IMIDRO) em- to 15 percent is unlikely to be phasized that by mixing oil, agreed upon but reduction of gas and mines huge sums will the royalties up to 25 percent be earned by the country. He is agreed upon by IMIDRO said: “It cannot be said that and the Majlis.” this sector can replace the oil industry because oil has its What is the share of own position in the economy. mineral products and min- But, by paying special atten- ing industries in the GDP? tion to the domain of mining The share of these two and mineral industry a proper sectors is up to six percent of income can be developed for the GDP, of which one percent the country.” belongs to mines and five per- Referring to the contro- cent to the mining industry. versy over determining the If investment in the mining mining royalties, Karbasian sector and exploration field is said: “The figure that has been improved and enough support stipulated in the 1394 (2015- is provided to investments in 2016) Budget Bill for usufruct mining industries the share is 13000 billion rials of which will definitely increase. If we 50 percent or close to 6000 want to fulfill the Vision 2025 billion rials is IMIDRO’s plan to become the top eco- share and the remaining 7000 nomic power of the region, billion will go to the Treasury we should achieve the eight to be spent by the government percent economic growth rate and the Majlis as they deem. and this will not be realized Obviously, under the current unless we develop the invest-

ment domain. endorse the bills. Obviously we pursue the nuclear talks we the oil industry as oil plays its The government has de- greater efforts are needed to should make further efforts to own part in the economy. But, cided to restore boom to the be made in this regard. It must attract foreign investments. special attention to the mines Iran’s Mining Projects economy and has forwarded be admitted that international and mining industry can gen- two bills to the Majlis for interactions are effective and Can the mining sector erate new appropriate income coming out of recession and our resources for domestic be an alternative for the oil for the country. We possess supporting production. The investment are limited; we industry? gas, iron ore, coal, chromite, Open to Foreign Investors MPs too are holding delibera- cannot achieve growth in all The mining sector cannot copper, silica, etc. which are tions and will most probably domains. For this reason, as be described as a substitute for considered to be special ad-

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vantages. If we succeed in de- should be implemented in the veloping the exploration field deprived regions of the coun- in order to access new mines try, or where high technology and at the same time transfer is needed with both cases be- their processing to the min- ing risk prone, there is need ing industries sector in order for development organizations to meet domestic needs and to enter into the scene. target foreign markets, more Fortunately, develop- added value will be devel- ment organizations have oped. For example, if one cu- been restricted and can run a bic meter of gas is mixed with company as a subsidiary for mining industries, three to a maximum of three years. four times value added will be If the company becomes op- created. In fact, by mingling erational they should transfer oil, gas and mines, huge rev- it which will prevent expan- enues will be generated and sion of the government. On we can use these advantages. the other hand, development organizations have full au- What mechanisms are you adopting for investment in mines and mining If we want to industries? fulfill the Vision It seems that more attention should be paid by 2025 plan to the National Development become the top Fund to the mines and mining industries and facilities should economic power be granted under easy terms of the region, we because this field is risk- prone and the return comes should achieve in long-term. Therefore, more the eight percent facilities should be paid to this field. In this regard we economic growth have proposed that in projects rate and this will where we have cooperation with the private sector we not be realized could use up to 49% of the facilities of the NDF. unless we develop The proposal is pend- the investment ing approval. If approved the private sector too could use domain. facilities of the NDF up to 51%. I believe that we should thority in developed countries not go to the extremes. It is such as Japan and the US and true that we should proceed are considered the arm of the towards delegating the job to government and the national the private sector in order to economy. If development or- strengthen this sector; howev- ganizations fail to enter into er, we should also accept that investment through the gov- the private sector has its own ernment support, which sector limitations. would shoulder the burden of Currently, the real private development of major indus- sector has huge debts to the tries in the country? In some banking system and the gov- projects, development organi- ernment owes contractors a zations due to absence of in- lot of money; in the meantime, vestment by the private sector due to the sanctions they can- should make investment up to not use international facilities. hundred percent. Therefore, it should be admit- For example, in Sangan ted that in big projects which project five million tons of

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pallet and five million tons gage in different trade and in- LC contracts with the Chinese of concentrates were devel- dustrial transactions in mines under the previous govern- oped and the public sector was and mining industries. ment were on 60-40 or 65- hundred percent in charge. 35 basis which we intend to But recently a six-member Which countries have change to 50-50 in mines and private sector consortium has initiated talks with Iran? mining industries. That is to undertaken 60% of the project Most of the negotiating say, 50 percent of the items and IMIDRO has invested in delegations are from Europe, and goods be Iranian and the the remaining 40% percent. especially Germany, Italy, other 50% foreign equipment Also, in steel projects between Belgium, and France. They and machinery, most of which 65 and 80 percent have been have taken steps for making should be Chinese on the basis taken over by the non-govern- investment in Iran. Moreover, of the contract. Of course, we mental sector (private sector), talks have also been held with have managed to use Euro- and IMIDRO’s participation Australia recently. pean machinery or European has been reduced by 25 to 30 equipment manufactured in percent. Therefore, the Chinese China in our steel and alumi- have a small share in the in- num plants. What about the nego- vestment talks? tiations between IMIDRO Apparently, we were and foreign investors, in- faced with some problems cluding Germans, Italians The mining regarding Chinese finance. and Chinese who are fixed sector cannot Would you please elaborate? members at the talks? The Iranian government After the coming to pow- be described as had raised an issue according er of the Rouhani administra- a substitute for to which the Chinese govern- tion over the past year many ment had to take measures for foreign delegations have vis- the oil industry the opening of LCs at least ited Iran to hold talks with IM- as oil plays its twice as much as the Iranian IDRO. But now many of these money held by China. That delegations are expressing in- own part in the is to say, we should receive terest to make investment in economy. But, credit equal to the amount of mines and mining industries money we keep with China. due to the proper exploitation special attention In this regard, talks were held right and appropriate situation to the mines and between the Iranian and Chi- of mines in Iran. However, it nese banking systems. The should be admitted that these mining industry final agreement was to open investors, especially big com- can generate a new credit line after several panies, cannot enter into the months of negotiations which scene due to the limitations new appropriate has made the banking systems imposed by the sanctions, es- income for the of the two sides became active pecially in terms of money again. transfer. Because, they can- country. not receive facilities from Iranian producers are European or other banks or China’s investment complaining about the pref- take any measure to open L/ share in Iran is done with our erential trade agreement Cs. On the other hand, many money and in the form of fi- (PTA) with Turkey arguing of the companies are present nance and up to now it has that it does not serve the in- in world stock exchanges and not entered into direct talks terests of the Iranian side. are concerned any investment with IMIDRO. Projects such What is the status of may land them in the as South Aluminum and coal industries in the PTA? black list. are among plans that are be- We do not have broad Therefore, it can be said ing implemented with China. transactions with Turkey in In mining and mining and steel products, because the the total steel production of steel consumption drop in the Also, due to severe decrease that no actual investment has Of course it should be noted the mining industries field and industries field, most of our price of iron ore has suddenly the world, which reached 1.6 world and this cut iron ore in revenues, major mining been made yet but if the nucle- that there are some plans and interactions with Ankara are exports are destined to other dropped in China and subse- billion tons last year. China prices by half. companies such as Chaderma- ar talks reach positive results small-scale projects that are limited to the field of metals. countries including the Per- quently in the world and this imports its needed iron ore Drop in export of iron lou and Gol Gohar and even and the sanctions on money being implemented with Chi- Therefore, items under PTA sian Gulf littoral states. At has caused problems in the from other world countries in- ore on the one hand and price IMIDRO have faced huge transfer are eased or lifted, a nese money but their number with Turkey in the field of present, we are mainly con- world steel market. China’s cluding Iran. cut to half on the other caused financial problems over com- great number of foreign com- is limited. mines and mining industries cerned about spillover of Chi- share in steel production cur- This year, however, it re- that many Iranian miners sus- pletion of their semi-finished panies are expected to enter Their activities are main- are not extensive and thus nese steel to the Middle East rently amounts to 830 million duced its imports from other tain losses and even some of projects. the scene for investment or en- ly in the field of EPC and the there is no room for concern. and arrival from China of steel tons per year, equal to 50% of countries due to forecasts on the mines were closed down.

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ran’s budget is strongly dependent on oil and this Idependence has inflicted severe damage on its econom- ic structures so that in case oil prices drop in the world markets, the government rev- enues would fall and it would be unable to materialize its economic plans. Therefore we should think what mecha- nisms are available to reduce such dependencies and fluc- Mohammad Reza Bahraman, Vice-Chairman of Iran Mine House tuations in the market. Anti-Iran sanctions and sion and their production will the sudden oil price fall have go down. once again proved that oil Realization of govern- revenues would no longer be ment’s tax revenues in the able to meet government ex- mining sector requires small penditures. The government and medium-sized production is hard pressed in providing units to become active. Small for the country’s expenses and medium-sized units are and it has limited ways and those units that provide ac- means under the present cir- tual employment in the coun- cumstances to come out of try and if they are harmed it these bottlenecks. Increas- would not be easy for them to ing revenues through rais- get back on their feet. ing taxes and duties of pro- In this regard the gov- duction units is one of these ernment must adopt a con- The mining sector is the showing the privileges of this proper investment has been such as Iran Copper Com- is mainly located in the de- investments inside the coun- ways, but taxpayers are not structive and supportive ap- infrastructure of economic sector in the county for mak- made with regard to the ex- pany, Gol Gohar Company, prived areas of the country try and coherent planning is paying taxes in its real sense. proach as income tax can development. Mine and Min- ing investment and demand- isting capacities. From the Chadermalou, etc. and the investments have led required in order to use this Only production units with only be paid when production ing industries supply and ing government support. Iran beginning of oil exploration Each of these companies to a rise in employment and opportunity for the future de- identity cards pay taxes as the increases; it is under such complement other industries is in possession of one per- in Iran, around $1,000billion plays a significant role in the eradication of poverty in the velopment of the country. Ef- addresses of these units are circumstances that small and and a boost in this section cent of the mineral surface has been fetched from oil, economy and has a determin- deprived areas so that these forts should be made to lead listed and they are the most medium-sized units can play would be directly or indi- and about three percent of only $23 billion of which has ing share in the capital mar- regions today have been investments towards new ex- available agencies that can be their due role. Today, a proper rectly effective in increasing the world’s known mineral been invested in the mine and ket. For example, by the end turned to relatively developed ploitation in the mining sec- forced to undertake supply of atmosphere has been created non-oil revenues. If the ad- reserves. It has 68 types of mining industries in Iran in of the past calendar year (end- areas. Grounds can be pre- tor so that mines can obtain government’s expenditures. for development of non-oil vantages of the mining sec- strategic mineral substances the past 50 years. ed March 2015) from $50 bil- pared as such that these areas a high share of the budget If government revenues industries; therefore, under tor are used properly, income but has not been able to use Such an investment has lion non-oil exports $7 billion use their maximum potentials in place of oil. The more we with respect to taxes depend these conditions advantage of this field will be increased the reserves and capacity to resulted in development of was allocated to the mining and reach self-sufficiencyand develop production in some only on units which used to should be taken of the gov- significantly. serve the national economy large mining industries such sector which is indicative of independence. sectors which will lead to the pay taxes those units would ernment’s outlook towards The high contribution properly. as Isfahan Steel Mill, Mo- the high capacity of this sec- Despite the existing cri- growth of industries, the less come under additional pres- non-oil products and the min- of the mining sector to the Although Iran is a coun- barakeh Steel, Khuzestan tor for attracting investment. sis, today provides the best concern we will have in fund- sure due to the current reces- ing sector must be developed. GDP is one of the indications try rich in mines, however no Steel and giant companies Also, mining industry opportunity for preferential ing the budget.

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