In the Name of God Table of Contents PART I 3 INTRUDUCTION 4 Message of the Chairman 5 Iran at a Glance 6 Iran’s Mineral Reserves & Mining Industry 7 Foreign Investment Promotion & Protection Act (FIPPA) PART II 9 IMIDRO AT A GLANCE 10 Background 11 Vision 12 Objectives 13 Strategic Objectives 14 Strategies 15 Organizational Chart 16 IMIDRO’s Groups 17 Mine Group 18 Steel Group 19 Copper Group 20 Aluminum Group 20 Cement Group PART III 21 Investment Opportunities in Iran’s Mines & Mining Industries PART IV 25 Introducing IMIDRO’s Investment Projects PART I INTRUDUCTION Iranian Mines and Mining Industries Development and Renovation Organization 4 Message of the Chairman On behalf of Iranian Mines and Mining Industries Development & Renovation Organization (IMIDRO), it pleases me to submit to you this investor’s guide, the main intention of which is to introduce lucrative investment opportunities in Iran’s mines and mining industries. Iran is blessed with abundant mineral and energy resources, a young, educated and experienced workforce, a relatively untouched market of 75 million, access to international waters, low cost labour, a developed infrastructure of roads, railways, ports, power supply and telecommunication network, together with a set of investor friendly laws and regulations; all of which make Iran a particularly attractive country for international investors. Referring to Iran’s mines and mining industrial potentials, Iran possesses 68 different kinds of minerals. Its known iron ore reserves amount to 2.7 billion tons (0.8% of total global reserves) and known copper ore reserves amount to 2.6 billion tons which account of 4% of global reserves. Iran also possesses 11 million tons of zinc (4% of global reserves) and 250 tons of gold (0.5% of global reserves). The mines and mining industry have a 25% market share in the Tehran Stock Exchange with a value of approximately US$30 billion. Our main role in the production of base metals is to invest in crude metals. Yet by no means does this mean that investments of the private sector or foreign investment in this field is not welcome. Unless the private sector expresses little desire to invest in the production of rolled metals due to the high investment volumes required, technical complexities or late investment returns involved, we do not directly involve ourselves in this sector. On special occasions, we invite privately owned companies to enter into joint-venture partnerships with us. Private sector stakes in these projects may vary in accordance with their wishes. Hence, IMIDRO cooperates with and supports the private sector in this way. Referring to foreign direct investment (FDI), this organization essentially supports those investors who transfer modern technologies and management skills while providing training to the local work forces, have access to the global distribution and sales network and have the financial backing to invest mega projects for which domestic funding is scares. To summarize, we would like to take this opportunity to express our gratitude for taking the time to study this investor’s guide and we hope that it shall provide a helpful platform in which in the right investment projects may be selected which best suit the particular requirements of international investor. Mehdi Karbasian Iranian Mines and Mining Industries Development and 5 Renovation Organization Iran at a Glance Official name: Islamic Republic of Iran Head of State President: H.E. Dr. Hassan Rouhani National Day: 11th of February (Islamic Revolution of Iran-1979) Capital: Tehran Area: 1,648,196 sq km Land boundaries: 4,137 km Sea boundaries: 2,700 km (Including the Caspian Sea) River boundaries: 1,918 km Neighbouring countries: Afghanistan, Azerbaijan (Nakhichevan), Total exports: 98,033 million US $ Armenia, Iraq, Pakistan, Turkey, Turkmenistan (2012) Climate: Mostly arid or semi-arid, temperate along Caspian coast and Foreign Direct Investment: 4870 mountainous temperate along west and north-west. million US $ (2012) Main natural resources: Petroleum, natural gas, coal, chromium, copper, Main industries: oil and gas, steel, iron ore, lead, manganese, zinc, sulfur aluminum, copper, electric and Arable land: 300,000 square km 18.2% electronic equipment, cement & other Meadows and pastures: 900,000 sq. Km 54.6% building materials, metallurgy, home Forest and woodland: 120,000 sq. Km 7.3% appliances, iron, textile, rugs and Irrigated land: 70,000 square km 4.2% carpets, tapestry, miniature, ceramic, Main agricultural products: Wheat, rice, barley, potato, grains, food processing (particularly sugar sugar-beet, cotton, fresh & dried fruits, dates, pistachios, fruits, nuts, refining & vegetable oil production), poultry, meat, dairy products, wool; caviar, flowers and medicinal plants. petrochemicals, and car manufacturing Population: 76.03 million (2012) & assemblies Literacy rate: (2011) Total 84.2% Electricity production: 232,955 پ National currency: Rial (IRR) GWH (2010) GDP: 448.2 billion US$ (2010) Transportation: Railways networks GDP per capita: 6030 US$ (2010) 12000 km (2013), road networks GDP growth rate: 6.4 % (2010) 220000 km (2013), 11 commercial Total imports: 53,451 million US $ (2012) ports and 54 airports Iranian Mines and Mining Industries Development and Renovation Organization 6 Iran’s Mineral Reserves & Mining Industry Iran is a rich country in terms of minerals and natural resources. There are 68 different types of minerals in this country with reserves amounting to 43 billion tons estimated to be worth US$700 billion. Iran’s known iron ore reserves amount to 2.7 billion tons (0.8% of total global reserves) and known copper ore reserves are estimated to stand at 2.6 billion tons which account of 4% of global reserves. Zinc reserves amount to approximately 11 million tons (4% of global reserves). In addition, with 250 tons of gold, Iran possesses 0.5% of global gold reserves. Iran is also blessed with considerable amounts of numerous other minerals such as magnesium, chromites, bauxite etc. Last year, Iran’s mines and mining industries related exports amounted to approximately US$8 billion. It is noteworthy that this industry employes over 620 thousand people in Iran and has a considerable 25% market share in the Tehran Stock Exchange (TSE). Iranian Mines and Mining Industries Development and 7 Renovation Organization Foreign Investment Promotion & Protection Act (FIPPA) By introducing the Law of Attraction & Protection of Foreign Investment (LAPFI) as early as 1955, the Iranian Government provided foreign investors with incentives and rights. Later by 2002, a new, more modified law known as Foreign Investment Promotion & Protection Act (FIPPA) was introduced. Under FIPPA, investment may be admitted under the following two categories: • Foreign Direct investment (FDI) in fields where the activity of the private sector is permitted; • Foreign Investments in all sectors within the framework of “Civil Partnership”, “Buy-Back” and “Build- Operate- Transfer” (BOT) schemes where the return of capital and profits accrued is solely emanated from economic performance of the project in which the investment is made, and such return of capital and profit shall not be dependent upon a guarantee by the government or government companies and / or banks. Iranian Mines and Mining Industries Development and Renovation Organization 8 Privileges & Rights under FIPPA The main privileges and rights offered under FIPPA include: • The right to transfer profits (dividends) as well as capital and gains on capital in foreign exchange. • Inapplicability of price control, distribution as well as local content and manufacturing requirements. • Utilities price (water, power and gas price) for foreign investors is the same as for local investors. • Direct access to and possibility of withdrawal of export proceeds out of Escrow Accounts established in banks outside the country. • Export of goods and services without any commitment to reintroduce export proceeds to the country (i.e., no surrender commitment requirement). • Reduced income tax rates from 65% to a fixed 25% rate. • The right to enjoy equitable treatment accorded to domestic investors. • Convertibility and transferability of the funds resulting from various investment and transfer of technology agreements. • The right to receive compensation resulting from expropriation (deprivation of ownership) and nationalization of foreign capital. • The right to receive compensation resulting from the passing of laws or Cabinet Decrees causing prohibition or interruption in the implementation of financial contracts of foreign investors. FIPPA obliges the Iranian government to compensate foreign investors, should their business be privatized for any reason; covering investors against such risks. Furthermore, whilst under normal circumstances, foreign investors are prohibited to have more than 49% ownership in any company registered in Iran under FIPPA foreign investors have up to 100% ownership in Iranian registered companies. PART II IMIDRO AT A GLANCE Iranian Mines and Mining Industries Development and Renovation Organization 10 Background In execution of Article 6 of the Based on the council of Minister’s decree and in accordance to clause A Centralization of Industrial & Mining of article 4 of Iran’s 3rd Economic, Social and Cultural Development Plan Activities Act and for the purpose of Act, IMIDRO was defined as a specialized mother company of Ministry evaluating and determining the overall of Industries & Mines, which would control