The Forum for Partners in Iran's Marketplace

November 2020, No. 95

On Agenda

Hidden Treasure

We have both oil resources and rich mineral reserves. In addition, we have three billion tons of known coal reserves, and yet coal is not one of our priorities and not much exploration has been done.

Dr. Mehdi Karbasian

Mine is a God-given chance and capacity that not all countries have because the number of mine rich countries in the world is limited. Interestingly, some of these countries have good reserves and are single-product or multi-product but do not have energy reserves like us. For example, in underdeveloped countries such as Guinea, there is oxide and oxide mines with aluminum raw materials, and it is one of the richest countries in the world, but it is close to zero in terms of energy, gas, oil and coal. The most Guinea can do is to extract and export raw materials. In a developed country such as Australia, which is one of the richest in terms of iron ore reserves or some other items, because there is no energy it is one of the main exporters of crude iron with exports mainly to China. Statistics show that in 2019, Australia exported nearly $100 billion worth of iron ore to China, which is a very astronomical figure.

Now, if we want to compare these countries with Iran, we will see that Iran has three characteristics, first, that there are 68 minerals in the country, including copper, iron ore, zinc and chromite, etc., some of which we have just extracted, exploited and processed, and in diversification of products we are one of the few mineral countries in the world; secondly, we have not yet done a full exploration in terms of extraction and only in IMIDRO (Iranian Mines and Mining Industries Development and Renovation Organization) with the help of the Atomic Energy Organization of Iran (AEOI) we were able to complete 200,000 square kilometers of new aerial geophysics; this shows that the country has 1.6 million square kilometers of mineral land, the information of which is just being completed.

Third, more importantly, we have energy other than these raw materials or minerals; in other words, we have both oil resources and rich mineral reserves. In addition, we have three billion tons of known coal reserves, and yet coal is not one of our priorities and not much exploration has been done. Raw materials, when combined with energy, create high added value and generate employment and development.

During the short period after the announcement of the breakthrough Iran Nuclear Agreement (also known as the Joint Comprehensive Plan of Action), reputable international companies such as Canadian and Australian companies came to Iran and helped us to explore, but the duration was very short and we could not import technology in this short period. Of course, note that we were under sanctions at the time and they did not fully fulfill their obligations.

In 1397 (2018) and 1398 (2019), about 9 to 10 billion dollars of mineral products were exported, including copper, steel, zinc and even minerals, which is a large number; in other words, of 45 billion dollars of non-oil exports, 20 to 23 percent is related to mineral products. Some of these items have multiplied value added. For example, the international price of iron ore is about $60 to $65. In this case, $60-$65 is imported in the first cycle of sponge iron and in the concentrate, pellet, sponge iron, steel ingot and sheet factory, respectively, and has a high added value.

When the price of steel is $450, $500 and $600, when it reaches the stage of sheet production, it goes from $400, $450 to $800, $900. But we have to ask why this amount of added value is created. It must be said that we have cheap gas and coal, and because we also have minerals, we can fetch very high benefits for the country by developing this sector.

Fortunately, in recent years, we have made good progress in terms of technology and factory construction. At present, the capacity in the concentrate sector has doubled. In other mineral fields, we have witnessed good growth. It should be noted that these positive achievements have been made with all the backwardness in aerial geophysics and the recognition of reserves and backwardness in terms of technology and investment. 

In the field of mining and mining industries, we can name 120 types of materials, from radioactive materials to ordinary materials such as lime.

Do you have an estimate of the dollar value of the discovered stocks that have been explored? What is the value of their crude sales?

In 1390 (2011) and 1391 (2012), the figure announced was $700 billion but to be honest this is definitely not an exact figure because an organization has to come and do the assessment and this is part of the responsibilities of the Ministry of Industry, Mine and Trade or the Geological & Mineral Explorations of Iran (GSI) Survey. It seems that no time and budget has been set for this task. What I can say is based on the vast discoveries we have made. When I was in charge of IMIDRO, we started 270,000 km of exploration and reached 450 promising areas. Fortunately, IMIDRO’s current management continues this process and has been able to reach an agreement with the Ministry of Industry, Mine and Trade has defined 300,000 new kilometers, although the private sector has also entered this field. In particular, some large companies such as Mobarakeh (Esfahan’s Mobarakeh Steel Company), Chadormalu (Chadormalu Mining & Industrial Company), Golgohar (Golgohar Mining & Industrial Co.) or Mahan (Mahan Mines and Industries Development Company), and MIDHCO (Middle East Mines Industries Development Holding Company) have entered the field of exploration.

IMIDRO predicted in 1392 (2013) in Sangan that the amount of iron ore reserves in this sector would be about 800 million tons, while with the exploration work that was done, this figure increased by 50%. As for Zarshouran Gold Mines and Mineral Industries Development Company, in 1392 it was said that 80 tons of gold would be stored there, and later with new excavations and discoveries that were made in 1396 (2017) or 1397 (2018), the figure reached 120 to 140 tons. That is, new discoveries are changing reserves. The same is true in the copper and other fields. So I think this figure is not precise. My prediction is that it is at least double, but I still do not know exactly.

Why has the government not paid attention to this sector in the last 40 years? Has it not really been a priority for the government or has it deliberately not wanted to involve the private sector? Currently, there are three or four thousand part-time and closed mines in the country that do practically nothing; there is so much obvious capacity, and investing in this area is certainly profitable, but neither the government enters this sector nor allows the private sector to enter this field. What is the reason for such attitudes?

The mining sector has been a bit hot over the years, with some large public and even private companies entering the sector. For example, in the case of Sangan, a number of large public enterprises, such as Parsian Bank, invested billions of rials and launched projects there, or the Foundation for the Underprivileged is investing there, or the National Development Company affiliated to Bank Melli Iran has entered this sector.

As you see, the position of mining and the mining industry is well known, even among the private sector. The issue of mining has several points. One is that we have to admit that in a grand strategy over the years, the mining sector has not been given as much priority as in oil and agriculture, except for a period in 1370-1376 (1991-1997), when the then Ministry of Mines and Metals was in a construction period and we saw serious attention to the formation of a separate ministry. After the launch of IMIDRO, good foundations were laid in the mining sector between 1381 (2002) and 1383 (2004), and as a result, the private sector became more active. For example, in the field of cement and iron ore, good measures have been taken during these years, even in the field of steel, little action has been taken, but the point is that the general attention of the government, which in my opinion goes back to the Plan & Budget Organization (PBO) is weak in this respect. 

What will happen to these several thousand mines that have been handed over and most of them are closed? Either the government should take them back and give them to others, or at least solve their problems.

This is part of the duties of the Ministry of Industry, Mine and Trade. One of our problems in the country is that some organizations give licenses but there is no more supervision. Not that they do not want to do it, but there are two reasons, the first reason is that the organization does not have staff or in any case does not have the necessary facilities for monitoring. In addition, monitoring may not be one of their priorities.

Monitoring the transfer of mines was on the ministry’s agenda during Mr. Hassan Rouhani’s first administration, and was part of the ministry’s duties. Even at the national level, mines that have licenses but no action has been taken will be given time and their licenses revoked. A lot of work started in 1394 (2015) and 1395 (2016), I do not have the latest information on their situation, but you are right it seems that solutions should be adopted and some of their problems should be solved.

But we started a project in IMIDRO, which fortunately continues, based on which supporting the medium and small mines was put on the agenda, and we envisaged a unit called ‘support for small mines’, which started its activities in 1396 (2017) and 1397 (2018). At present, a good unit has been established in Iran Minerals Production And Supply company (IMPASCO) that supports medium and small mines, and recently, as statistics showed, a number of these mines have returned to the production cycle.

I personally believe that the current Ministry of Industry, Mine and Trade should be revived not for the long term but for a limited time; for example, the Parliament should approve the revival of the ministry for 10 years to pay special attention to the field of mines and metals.

Currently, there are ministries in the government that if dissolved or merged nothing would happen; for example, the Ministry of Telecommunications is an important place, but it cannot do anything right now; its large companies are owned by institutions or the private sector. The Ministry of Telecommunications can be merged with another ministry. 

Was the formation of small and medium-sized mines the right policy? In the field of agriculture, it is believed that we should change from micro-agriculture to industrial agriculture. According to this issue, instead of defining 3,000 mines, why 300 mines are not defined?

The mines have multiple owners, or they are the property of individuals, and later the mine is identified there, or it is the property of national lands, and the individuals are licensed to operate there. There are differences between them. Between 1395 (2016) and 1397 (2018) a sound policy was adopted in which ownership was for the individual, the company, or even the government, but its exploitation, extraction, and value added were shared with the owner. Projects such as Golgohar 1, Golgohar 4, Golgohar 5, Golgohar 6, Khomrud Mine, Joghatai Chromite Plant, Nakhlak Lead and Mehdiabad Lead and Zinc, etc., each of which required billions of dollars or hundreds of millions of dollars of investment while maintaining government ownership of the mine. We have been using it for 20 years through auctions and in accordance with the law, so that people would be willing to invest.

In addition, fortunately, large companies such as MIDHCO, National Iranian Copper Industry Company (NICIC), Chadormalu, and especially Golgohar, have started this work and have now developed it, on the basis that they are concluding long-term contracts with small and medium-sized mines.

Perhaps one of the best models is this because we should not enter into ownership, but large companies can enter into long-term contracts and also give them long-term loans for investment. 

Why are mining and mining industries less vulnerable than oil when it comes to Santions?

In the field of mining and mining industries, we can name 120 types of materials, from radioactive materials to ordinary materials such as lime. There is a great variety of materials here, and secondly, the variety of consumers of these materials and their producers is much greater than oil products. If you list the number of oil rich countries in the world, their number will be 10 to 15. But concerning oil if you drop 5-6 main players others would have no role to play. The United States, Iraq, Russia, Iran, Saudi Arabia, Venezuela, Libya, Algeria, Kuwait and the UAE, are the 10 countries.

Third, oil has been politicized from the beginning, that is, it is more political than economic, and it has gone into the political realm at all, while in the mining sector some of its items may be political, such as uranium, but many of its items are not political. Therefore, the United States has banned the export of our copper and steel since 1397 (2018), then put Mobarakeh on the sanctions list, but the export is still done because the consumer needs it.


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  November 2020
No. 95