World population will continue to grow at the rate of below 1 percent by 2030 and urban population as consumer will increase to 60 percent from current 52 percent, according to the United Nations. By 2025, per capita income growth in many countries in the world increases continuously including China in where it will reach 20,000 dollars from 8400 and in India from 3600 dollars to more than 8000.
Limited reserves of natural resources in the world
Considering the current global consumption rate, life of main discovered minerals reserves (manganese, copper, lead, zinc, gold and silver) is between 20 to 48 years and very limited. The solution ahead of the world is confined to investment in exploration and taking into consideration recycling of materials or using lower grade minerals and alternatives.
Despite ongoing economic crisis originating from financial crisis of 2008, price and consumption of raw materials in general have recovered; for example iron ore and coal prices are 18 percent higher and copper 10 percent up while zinc price is almost the same as it was in the third quarter of 2008.
In coming years, increasing demand from China and India plays key role in price and tonnage of mine and mining industries products. Considering the forecasts, it can expect that any increase or fall in minerals price in the next three years will be temporary and after that we see sustainability and stability of markets.
Overall advantages of mine and mining industries sector in Iran
1. Existence of 57 billion tonnes of proven reserves
2. Access to energy and high seas
3. Skilled human resources
4. Consumption markets in 14 neighbor countries
Share in the national economy: Value added share of mine and mining industries in Iran is equal to 36 percent of gross domestic product (GDP).
Importance: investment in mine and mining industries is first step toward industrialization of the country, therefore consumption growth of minerals has created special position in Iran for industrialization.
Economic value: the reserves which have been discovered so far worth 700 billion dollars.
Stock market performance: it has 36 percent shares in Tehran Stock Exchange.
Job creating: it has created 620,000 jobs across Iran.
Investment attraction in the view of international experts
In the world, in average each unit of value added in mining industries usually adds three unit of value added to national economy.
• Forty-five percent of global GDP is related to natural resources and relating industries, of which share of mining sector and relating services is 33 percent. In the world, each unit of value added in mining industries adds three unit of value added to national economy, however in the United States and other developed countries the figure is higher.
• One percent of employment in the world is related to the mining sector and mines have key role in infrastructure and regional development. According to data, 80 percent of people in a region will benefit of them (for example 40 percent of AngloGold’s gold project cost in Congo is related to infrastructure.
• Today modern world can’t exist without minerals (Smartphone, wind turbine, toothpaste), for example a 2 megawatts wind turbine is consisted of 300 tonnes of steel, 5 tonnes of copper, 3
tonnes of aluminum and 1200 tonnes of concrete that are all minerals.
The role that mine and mining industries sector can play in balanced development of different regions of the country
IMIDRO is a development organization who targets development and renovation of mines and mining industries of the country. If we profit from relative advantages of mines and natural resources of the country as well as special position in transit corridor and suitable distance with consumer markets of Asia and Middle East and take into consideration investment, turnover and revenue of this sector of the country’s output and add significant share of employment particularly in deprived areas, we recognize magnitude, importance and sensitivity of this sector of the economy which is not less than oil. It should note that relative advantage of Iran’s mines and mining industries is so significant that immediately after foreign exchange rate increase and three fold rise of US dollar and tightening of sanctions, the mining industries not also increased their productions and revenues, relying on their capacities and capabilities, but also export of many mines and mining industries of the country increased. So if currency and exporting policies adopt in support of industries like steel, in times of local industries relative slump and reduced demand for steel, the large industrial capacity can be used to export and earn more foreign currency, something that require management, rapid and timely decision making and holding meeting and committees to have impact on macro decision of the country to support national output, export growth and use of available capacities and relative advantages of the country in the mining sector.
Sanctions and foreign exchange rate increase was a good opportunity that allowed relative advantages and available capabilites in mine and mining industries sector reveal themselves and underscore the purpose behind experts and industrial executives efforts in recent years and built infrastructure and what will be impact of boosting industrial and manufacturing foundations to industrialization process of the country.
thirty percent of Industry, Mine and Trade Ministry’s projects in priority are mine and mining industries projects
Thirty percent of Industry, Mine and Trade Ministry’s projects in priority are related to mine and mining industries sector. List of investment priorities released by the Ministry in month of Tir (June 27-July 22) showed of 215 projects, 64 ones belong to mine and mining industries sector.
In this regard, mine and mining industries divide into four fields including exploration, extraction, metals and metal industries and non-metallic minerals. The latter one has the highest share with 37 projects which are allocated to it, followed by metal industries with 21 projects and exploration and extraction with 4 and 2 projects respectively.
Some of macro objectives of IMIDRO
• Creating 120,000 direct and indirect jobs
• Increasing annual export to 23 billion dollars by 2018 from current 7.5 billion dollars
• Ten-fold expansion of exploration and increasing minerals reserves as starting point of new value chains
• Rising GDP by 40 billion dollars through implementing plan of the organization
• Creating balance in mine and mining industries value chain and exporting steel with annul value of 5 billion dollars from 2017
• Improving global ranking in crude steel production by 9 ranks ( 2 percent share of global production), in iron ore by 3 ranks (2 percent share of global production), copper by 12 ranks (2.5 percent share of global production), aluminum by 8 ranks (1.8 percent share of global production)
• Increasing diversity of products (molybdenum, manganese, potash, rare earth elements, etc.) and accessible local technologies fitting the needs of the country (upgradation of low grade minerals, mobile processing systems,etc.)
Expansion plans
According to the latest plan, direct expansion plans of the organization include 29 projects with overall investment of 24,165 billion tomans. But huge volume of required investment and lack of financial resources emerged as a challenge in IMIDRO in the beginning of the Eleventh government work, however the organization managed to reduce its share in projects costs to 3700 billion tomans from 24165 billion tomans, in addition to attracting private investors by adopting funding policies.
According to the forecasts, 7 projects including Zarshouran Gold, Kahnoj titanium, Almahdi rodding and Venezuela cement and also direct reduction units of 3 provincial projects of Shadegan, Mianeh and Chaharmahal will go on stream. Other project will be exploited gradually by 2017. All the mentioned developments suggest that hope and prudence government tries aggressively to achieve objectives of 2025 outlook and Fifth Development Plan in industry and mine sector.
Setting new development plans
Possibility of setting new development plans worth more than 5 billion dollars with participation of private investors has been provided by adopting privatization policies and new financing methods, in addition to reducing financial burden of the organization in implementing the projects which were approved in the past
row Project title Capacity
1 Chabahar Steel 5 million tonnes
2 Bandar Abbas Steel with participation of foreign investor (India Essar) 4 million tonnes
3 Bandar Abbas Steel with participation of foreign investor (Kuwait Steel) 1.6 million tonnes
4 Almahdi Aluminum phase 3: completing relating studies 300,000 tonnes
5 Upgradation of iron ore grade: there is ongoing negotiation to obtain technology and implementing first project in this field
Investment in the field of exploration
A three years exploration project in areas with mining potentials covering 200,000 square km with an investment of 1225 billion tomans
IMIDRO has put in priority exploration projects to expand mining sector. To this end, it is set to carry out mining explorations in an area vast of 200,000 square km across the country and areas with high potential of deposits and primary exploration will have priority.
So far the contract is signed with private sector to carry out exploration activities in 60,000 square km areas mainly in Sangan and Saravan.
Currently, 68 types of minerals have been discovered but with a primary study there would be possibility of discovering 80 types of minerals in the country. According to data, minerals reserves of the country worth about 700 billion dollars while the figure in some of neighbor countries surpass 1 trillion dollars. Thus with adequate investment in mining explorations and exploration in large scale, value of minerals reserves will double the figure.
In the other hand, the Eleventh government and Ministry of Industry, Mine and Trade policy pursue proper implementing of Article 44 and supporting private sector for investment to attract private sector, Iranians abroad and foreign investment so that new funds flow in mine and mining industries sector.
One of the other measures taken in the field of exploration is 50 percent increase of mining exploration projects budget by IMIDRO in the current Iranian year compared with last year. Mining exploration budget for 1392 (2013-2014) was about 800 billion rials which was increased to 1200 billion rials by investment committee of Iranian Mines and Mining Industries Development and Renovation Organization in the budget for 1393 (2014-2015).
Expanding mining explorations in high risk areas, expanding prospect of rare and strategic elements necessary for future technology (such as chrome, lithium and antimony) as well as rare earth elements were set as the objectives of the organization in 1393 and are put on its agenda.
Moreover, completing semi finished exploration projects of mines owned by IMIDRO including Zarshouran, Sangan, Jalal Abad, Gol Gohar, Mahdi Abad and Central Plateau Iron Ore Mining Complex would be part of completing explorations of IMIDRO in 1393.
Development outlook of mine and mining industries sector under Eleventh government
Balance in mine and mining industries sector requires comprehensive planning and it should take opportunities to eliminate worries of the sector. One of the key factors in development of any sector is investment and its management and naturally it can be applied for mining sector too. The sector has been always drew attention of Iranians abroad and foreign investors due to its attractions and high yield. Looking back to the events in the past 12 months suggest interests of foreign investors for Iranian mining sector. Firms from Germany, Finland, Belgium, Australia, India, China and others eye investment in developing mine and mining industries of Iran. So considering the past sanctions, one of the main plans of IMIDRO in the next year is attraction of foreign investments. Accelerating implement of semi finished projects and particularly launching seven provincial steel projects are among plans of IMIDRO in 1393.
Export growth
With implementing all projects of mine and mining industries sector, its export will grow three times more to 23 billion dollars from 7.5 billion dollars. The required fund for mine and mining industries project amount to 29 billion dollars. Using facilities from National Development Fund and private sector investment through offering attractive incentives and receiving foreign investment are considered part of funding resources for the sector.
IMIDRO’s plan to attract investment for mine and mining industries sector in order of priority include local private sector investment, Iranians abroad and foreign investment. In this context, many local private sector investors so far expressed their readiness to complete semi finished and new projects of IMIDRO; 65 percent participation of private sector to implement provincial steel projects is among them. Also in recent months foreign firms particularly from Europe are negotiating to participate in mining projects. Expanding competitive mine and mining industries activities, completing production chain, expanding modern methods of financing and investment of private sector, foreign investment attraction and overseas investment, expanding knowledge, applied research and necessary technologies, expanding human resources and strategic marketing constitue mainly new plans of the organization. Entering processing low grade minerals, help to expand small mines, expanding private sector investment and offering investment packages to investors and activating halted projects which some of them delayed for 13 years are among other new plans of IMIDRO.
Solution to incite local and foreign investors participation in the sector
IMIDRO’s plan to attract investment for mine and mining industries sector in order of priority include local private sector investment, Iranians abroad and foreign investment. In this context, many local private sector investors expressed their readiness so far to complete semi finished and new projects of IMIDRO; 65 percent participation of private sector to implement provincial steel projects is among them. Also in recent months foreign firms particularly from Europe are negotiating to participate in mining projects.
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