EghtesadOnline: As the head of Iranian Mines and Mining Industries Development and Renovation Organization, Mehdi Karbasian has been the face of the Iranian mining industry for the past few years.
He runs the country’s largest state-owned mining holding company, which has been at the forefront of developments in mining industries following the removal of sanctions imposed on Iran over its nuclear energy program. First established in 2002, IMIDRO advanced the governmental agenda to develop Iran’s mining sector to find a reliable alternative to oil revenues.
However, Karbasian is having a busy time these days. With the new fiscal year (March 2016-17) having just started and the presidential election coming up in about a month, the IMIDRO chief has recently appeared in several interviews and reports in local media, elaborating on IMIDRO’s track record during the four years he has been in office.
He has profiled numerous mineral projects finalized ever since the incumbent administration came to power in August 2013. He discusses the challenges ahead while outlining a roadmap for the organization, Financial Tribune reported.
According to Karbasian, Iran is the world’s 15th mineral-rich country, holding more than 7% of global mineral reserves worth over $700 billion. He believes further explorations could place the country among the world’s top 10.
IMIDRO, with its significant outreach in Iran’s mining sector, has been the patron of nearly every mining development program undertaken in Iran in recent years.
Most of the country’s major mining companies are in fact subsidiaries of IMIDRO. Some of the most notable names include Iran Minerals Production and Supply Company, National Iranian Steel Company, AscoTec Group, Ehdas-e San’at Company, National Iranian Copper Industries Company, Central Alborz Coal Company, Zarshouran Gold Company, Iran Mineral Processing Research Center, Iran Mineral Insurance Company, South Aluminum Company, IRASCO S.R.L and Iran International Engineering Company.
IMIDRO was not in a good shape, Karbasian said in an interview with Khabar Online.
“When the Rouhani administration took over, IMIDRO’s total capital was about 600 billion rials ($15.78 million) as the organization’s assets worth 210 trillion rials ($5.52 billion) were recently privatized to clear debts. Some 70 unfinished mineral projects worth 24 trillion rials ($6.31 billion) were also pending,” he said.
A prominent example of these unfinished burdens is the seven provincial steel projects–described by Karbasian as a “sad story.”
The projects date back to 2006 when the previous administration led by former president, Mahmoud Ahmadinejad, decided to implement eight steel projects in the provinces of Chaharmahal-Bakhtiari, Fars, Khuzestan, Yazd, Kerman, East Azarbaijan, South Khorasan and Khorasan Razavi. However, only one of the projects was taken over by the private sector and the rest were not well received due to their inappropriate locations and undesirable situation.
Therefore, IMIDRO took over 65% of the projects’ shares and undertook the task of attracting the required investment.
“Now having used various methods such as partnering up with the private sector, selling off assets or borrowing, the projects are either under construction or already operational,” he said.
Sefid Dasht Steel Complex, located in the southwestern Chaharmahal-Bakhtiari Province, became operational back in October. East Azarbaijan’s Mianeh Steel Plant and Fars Province’s Neyriz steel mill also started production back in early March.
According to IMIDRO, the seven plants add at least 6 million tons to Iran’s annual crude steel output, while creating 7,000 direct and 35,000 indirect jobs.
According to Karbasian, other mineral projects on IMIDRO’s agenda include six mineral processing plants under construction in Khorasan Razavi Province’s Sangan Mineral Zone with an aggregate annual production capacity of 17.5 million and 15 million tons of iron ore concentrate and pellets respectively.
Two of the pellet plants with production capacities of 5 and 2.5 million tons per year are scheduled to start production next month, alongside a concentrate plant with a 2.5-million-ton output capacity.
Moreover, a titanium pigment plant with a production capacity of 50,000 tons per year was established in the city of Kahnouj in Kerman Province back in November.
“The plant was 30 years in the making amid lack of access to modern production technologies and adequate investment,” he said.
The IMIDRO chief added that 24 mineral projects valued at over $1 billion are set to be finalized in the first half of the current fiscal year (March 21-September 22).
Foreign Investors and Explorations
“Prominent foreign mining firms could not possibly enter business with Iran when we first took charge of IMIDRO [due to sanctions]. In fact, we could not even contact them before the nuclear deal, as they would either ignore our emails or interact through middlemen,” he said.
Sanctions were lifted in January 2016 after Iran signed a nuclear deal with world powers the year before.
In the post-sanction era, companies from Australia, Norway, Germany, Italy, Austria, Japan and South Korea have begun cooperation with Iran in a wide range of sectors, including steel, iron ore and environment.
According to Karbasian, over 350 million tons of iron ore, 450 million tons of coal and 50 tons of gold deposits have been discovered as part of IMIDRO’s mineral exploration projects initiated in 2013 to explore more than 250,000 square kilometers of the country’s area over a course of three years.
Other discoveries during the period include vast reserves of copper, antimony, zinc and lead, chromite, titanium, nickel, molybdenum, barite, phosphate and bauxite.
IMIDRO conducted part of the exploration project in cooperation with German and Canadian mining companies.
The lifting of nuclear sanctions against Iran enabled the domestic mining sector to attract foreign investments and modern exploration and exploitation technologies.
“Using satellite technology, foreign companies successfully explored deposits lying as deep as 10,000 meters underground. This is while Iranian operations had previously only managed to reach the depth of 500 meters,” Karbasian said.
Explorations are still continuing, the official says, noting that there will be a lot of “good news” for the mining industry by early 2018.
Iran is blessed with an abundance of underground resources, including world-class mines holding minerals ranging from iron ore to rare metals such as gold and turquoise.
Iran is home to 68 types of minerals with more than 37 billion tons of proven and 57 billion tons of potential reserves, including large deposits of coal, iron ore, copper, lead, zinc, chromium, uranium and gold.
According to the United States Geological Survey, Iran holds the world’s largest zinc, ninth largest copper, 12th largest iron ore and 10th largest uranium reserves.
Boost in Mineral Production Capacities
The Iranian mining industry’s production capacity for key products such as iron ore concentrate, pellet, direct-reduced iron and copper cathode has nearly doubled ever since President Hassan Rouhani came to power in 2013.
According to the Ministry of Industries, Mining and Trade’s news agency SHATA, copper cathode production capacity rose 45.8% from 254,000 tons per year to 469,000 tons during the period.
Iron ore concentrate output capacity was up 37% as it grew from 28 million tons to 44.5 million. Pellet-making capacity also recorded a 37.6% growth to 34.5 million tons per year. Direct-reduced iron production capacity was boosted by 32.4% to 27.7 million tons per year.
Crude steel production capacity jumped 24.1% to 31 million tons while steel product output capacity grew 20.5% to 39 million tons.
Iran’s crude steel output stood at 17.89 million tons in 2016, the World Steel Association reported.
The country aims to become the world’s sixth largest steel producer as per the 20-Year Vision Plan (2005-25), which envisions an annual production of 55 million tons of crude steel and 20-25 million tons of exports per year by the deadline.
Reaching the 55 million-ton target requires boosting production capacity for DRI to 53 million tons, pellets to 80 million tons and iron ore to 87 million tons per year.
According to Fooladnews, capacity expansion for the three commodities needs $2.4 billion, $1.87 billion and $1.34 billion in investments, 52.5%, 30% and almost 100% of which have been attracted so far.
Other mineral sectors, such as aluminum industry, had no noticeable growth in production in the four years under review.
According to SHATA, the Ministry of Industries, Mining and Trade’s main goal regarding these products has been preventing any downturn in production, which has been successfully materialized.
Nonetheless, aside from the steel industry and its downstream sectors, which have arguably been the government’s main focus in the mining sector, other mineral companies are still dealing with recession and lack of liquidity.
According to Deputy Ministry of Industries, Mining and Trade Mehdi Karbasian, the way forward is attracting foreign investors. The Iranian mining sector requires close to $50 billion of foreign investment.
About $30 billion of the figure will need to be invested in the steel industry, and the rest in copper, aluminum and other sectors.
Various European and Asian companies have entered Iran’s mining sector ever since the economic sanctions imposed on Iran over its nuclear program were removed back in early 2016.
However, the United States’ lingering restrictions on trading with Iran and the resulting impediment to banking transactions have made the process of investing in Iran too slow and complicated, because of which many sectors remain cash-strapped for launching expansion plans.