MetalBulletin’s Report on Iran’s “Non-ferrous Metal” Sector Growth in Post sanctions Era

The Iranian Mines and Mining Industries Development and Renovation Organization (IMIDRO) is the key government agency boosting this work and it announced on March 14 that it had signed a memorandum of understanding with the China’s Sinosteel Corporation to establish an alumina production plant and aluminum factory in Iran, along with an associated power plant supplying on-site electricity.

An IMIDRO note said the alumina and aluminum plants would be established by a joint venture under an engineering-procurement-construction-financing contract with an initial annual production capacity of 1.6 million tons and 350,000 tons respectively.

On February 23, German copper manufacturer MKM Mansfelder Kupfer und Messing GmbH signed a memorandum of understanding with the National Iranian Copper Industries Company (NICICO), involving the investment of €1 billion ($1.14bn) in Iranian mineral projects, including copper ore production.

Under the deal, MKM would help Iran develop downstream industries to obtain copper from copper cathodes. And the German company has offered to purchase 70,000 tons of copper cathodes from NICICO annually, according to a note from the Iranian company.

MIDRO has long been trying to boost mineral production capacity in Iran, estimating that the country’s new mineral projects proposed in the country’s fifth five-year development plan (ending 2015) should have cost more than $28 billion in investment.

But according to US Geological Survey (USGS) analysis released in June 2014, despite some foreign investment in Iran’s sold mineral sector (including non-ferrous metals) in the past few years, the availability of international funding for mineral-related projects by government-controlled and private companies has been hampered, partly because of international economic sanctions, now being eased.

That said, sanctions have not been the only problem: "High inflation and the relative lack of investment in the petroleum sector" are among them, the USGS report said. In 2012 the production of aluminum in Iran was estimated at 230,000 tons (plus 820,000 tons of bauxite), according to the USGS.

Chromite production [mines output, concentrate] was estimated at 400,000 tons. Copper is another key non-ferrous metal in Iran, with smelter output - blister or anode - at around 270,000 tons in 2012, while refined output (cathode) was estimated at 225,000 tons for 2012. The gross weight of copper ore mine output was estimated at 38 million tons in the same year.

Iran made 80,000 tons of zinc in 2012, and 210,000 tons of zinc concentrate. The production of gold in 2012 yielded 2,500 kg, said the report. Meanwhile the gross weight of lead mine concentrate output was 80,000 tons; manganese concentrate output was 200,000 tones and molybdenum concentrate, 7,000 tones. Despite the economic sanctions imposed on Iran as a result of the nuclear stand-off, it has managed to export non-ferrous metals, although trade levels have been uneven. Take copper – in 2010, Iran exported $180.7 million’s worth of unwrought refined copper and copper alloys to the European Union (EU), and in 2012, it exported $58.3 million’s worth.

In 213, it exported $3.5 million’s worth of copper scrap to the EU, according to international trade data. In 2014, the EU imported $7.8 million’s worth of unwrought aluminum from Iran, and $2.1 million’s worth in2012. There have also been some significant exports to neighbor Turkey. For instance, in 2014, Iran exported$165.3 million’s worth of unwrought refined copper and copper alloys to Turkish buyers; $88.3 million in 2013; and $160 million in 2012. And in 2014, Turkey imported $107.3 million’s worth of unwrought aluminum from Iran, and $66.7 million’s worth in 2013.

MetalBulletin interviewed with some managers of Iranian firms in nonferrous metal sector. They expressed that Iran is set to prosper from exporting and the domestic supply of a wide range of non-ferrous metals, including aluminum, copper, lead, nickel, tin, titanium, and zinc, and alloys such as brass. Precious metals such as gold and silver, and rare metals such as cobalt, mercury, tungsten, beryllium, bismuth, cerium, cadmium, niobium, gallium, lithium, selenium, vanadium, and zirconium, could all playing a critical role in the economy of the Islamic Republic, as it develops.

They cited France-based industrial engineering company Fives Group’s agreement with IMIDRO as an example of growing interest among international business groups in investing into the Iranian non-ferrous metal industry.

Metal companies were searching for new markets particularly in Europe and the Far East, adding that "there is also a significant tendency, particularly from European companies, to invest in Iran".

However, Iran needed to improve power supply reliability, noting that it would be needed to fulfil an Iranian government plan to increase aluminum production capacity up to 1.5 million tpy by 2025 through developing two smelter projects with 350,000 tpy nominal capacity in the south and south-west of Iran.