The Forum for Partners in Iran's Marketplace

June 2018, No. 87


Iran Finalizing 2 Billion Euros
of Foreign Mine Investment

Iran is finalizing about 2 billion euros of investment from Europe in copper and steel projects despite threatened new US sanctions, a government official said (April 26).

Early talks are also under way with Swiss investors to develop Mehdi Abad, one of the world’s largest zinc deposits, Mehdi Karbasian, Deputy Minister of Industry, Mine and Trade, told Reuters.

“We’ve had experience (of sanctions) of more than 35 years, but I hope this time Europeans are going to continue to invest,” Karbasian said in an interview on the sidelines of the CRU Aluminum conference in London.

“We’ve been having very good relations with Europe with a lot of imports, exports and investment for the benefit of both European companies and Iranian companies.”

Karbasian is also chairman of IMIDRO, the state-owned Iranian Mines and Mining, Industries, Development and Renovation Organization.

Iran’s rich mineral reserves ranging from iron ore to gold plus cheap energy have attracted interest from foreign investors since Western sanctions were lifted under the 2015 nuclear deal signed by Tehran and six world powers.

Tehran, however, has assured investors it was possible to hold full ownership of projects, to take profits abroad and have their investment guaranteed, Karbasian said.

Iran’s foreign investment law, the Foreign Investment Promotion and Protection Act (FIPPA), offers protection against expropriation and nationalization and allows foreigners to hold 100 percent ownership of Iranian legal entities, according to a government website.

A new aluminum smelter, due to be launched early next year, will boost production by 70 percent and make the country self-sufficient in the metal, Karbasian told the conference.

The $1.2 billion SALCO aluminum facility is being built and 85 percent financed by China’s China Nonferrous Metal Industry’s Foreign Engineering & Construction Co., or NFC.

In Iran, energy accounts for about 15 percent of the cost of producing aluminum due to the country’s plentiful gas reserves, while elsewhere in the world, energy can make up 30-40 percent of costs, Karbasian said.

Current talks regarding the 2 billion euros of projects include Italian and Austrian investors over two steel billet plants, while Danish investors are seeking to build a copper mine, Karbasian said, declining to identify the investors.

 “We are finalizing these projects, they are advanced negotiations,” Karbasian said.

He said Iran was seeking $50 billion in mining and metals investment over the next four years to meet its ambitious expansion targets, which include boosting steel production by 77 percent to 55 million tons by 2025.

Iran, which also aimed to boost aluminum output to 1.5 million tons by 2025, does not have sufficient reserves of raw material bauxite so it has secured a 400 million tons deposit in Guinea, for which it is seeking investors, Karbasian said.


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  June 2018
No. 87