ITM Interviews Mehdi Karbasian, Managing Director of IMIDRO

The Iranian Mines and Mining Industries Development and Renovation Organization (IMIDRO) is a specialized active parent company in Iran’s mining sector which manages several major and scores of operational companies active in different steel, aluminum, and copper industries and mineral products This organization is also duty bound to play its role in the field of empowerment of the private sector What follows is the text of an interview ITM has conducted with Mehdi Karbasian, Managing Director of IMIDRO.
The Iranian Mines and Mining Industries Development and Renovation Organization on the one hand is a specialized active parental company in Iran’s mining sector which is a major company and manages scores of operational companies in different fields of steel, aluminum, copper and mining industries. On the other hand, it is considered a government institution, which plays its role in the direction of empowerment of the private sector in this domain. How these two roles can go together?
IMIDRO, as a developmental organization, has made efforts in compliance with Article 44 of the Constitution to reduce its dominance over production process and direct management of production units and become active as a monitoring and policymaking organization in the mine sector and mining industries Now, it has transferred many companies and has been determined to continue this process through prioritizing the transfers Meanwhile, companies such as Iran Minerals Processing Center and the Mineral Activities Insurance Fund must be under the direct supervision of the government due to their characteristic nature Furthermore, IMIDRO will ready new development plans for transfer to the private sector or will cede them after three years of operation as required by the law.
Among the main policies of our organization is participation of the private sector in implementation of mine and mining industries projects IMIDRO has always called on this sector to help commission projects, which are under implementation The first priority in the transfer process goes to domestic private sector investors and efforts are underway to benefit from domestic manufacturers for the supply of equipment.
Given that implementation of some projects such as palletizing and concentrates requires heavy investment and domestic investors cannot afford them on their own, IMIDRO has prepared the ground for the presence of companies in the form of consortium (comprising different companies) For example, recently for the implementation of Sangan (pelletizing and concentrate) project the qualified consortiums were invited.
Therefore, IMIDRO brings together its specialists and experts to define and formulate development projects for mine and mining industries and the private sector investors are invited to implement them In addition, new explorations and provision of insurance facilities are among steps IMIDRO has taken for the empowerment and presence of the private sector.
It is necessary to refer to the role of IMIDRO as an organization that comes to help the private sector in order to lower the risk of threats For example, in the field of exploration, investment risk is very high It is possible for the investor to make big investment in this field but find no mines; or there may be a mine with low alloy reserves and not economical to conduct extraction operations In that case, the private sector would be at loss Therefore, involvement of development organizations is necessary up to the moment we make sure there is a mine for the private sector to get involved Thus, a combination of these two is not in contradiction with each other and what can be contradictory is for IMIDRO or any development organization to insist on running corporations and maintaining shares and projects, a line of thinking that does not exist in IMIDRO according to Article 44.
Where does IMIDRO stand in term of competition with similar organizations in the region and the world?

Under the present government and with regard to its interaction with the world, hope for future and improvement of business climate have lured foreign investors to turn to Iran For this reason, IMIDRO has decided to complete and commission unfinished projects first and in the meantime maintain a presence in international scene Nevertheless, operational implementation of these plans would depend on the outcome of the ongoing international negotiations (Iran and P1+5) and lifting of the sanctions which have created problems in money transfer Due to the present crisis, domestic investors have liquidity problems The banking system has been locked up and does not inject the required liquidity, which in turn hampers inflation control.
If we consider the relative advantages of mines and natural resources as well as transit condition and Iran’s short distance from consumer markets in Asia and the Middle East and pay attention to the investment, turnover and income in this production sector and add to it the great share of employment especially in deprived areas, then we will recognize the importance and sensitivity of this sector I believe that the significance of this sector of the economy is not less than oil.
I should emphasize that the relative advantage of Iran’s mines and mining industries is so attractive that immediately after the rise in the exchange rate and three time increase in the rate of the US dollar against local currency and also escalation of the sanctions, the mining industries by relying on their own capacities and capabilities not only increased production and income and addressed domestic needs but also raised their export capacity If foreign exchange and export policies are adopted in support of industries such as steel, under conditions of relative recession of domestic industries and reduced demand for steel, this great industrial capacity can be used for growth of exports and for hard currency income thereby.
Iran is considered one of the world’s top 15 mineral powers and a mineral rich country. Meanwhile ran’s mineral products and mining industries (except for oil and gas) constitute only %6 of the GDP. Why?
During the past decades, due to the huge investments made in the oil industry, the foundation of the Iranian economy was based on this industry and the government paid less attention to making big investments in other sectors The difficulties facing the mines and mining industries, such as low railway transportation capacity, low volume of facilities, high interest rates, lack of specialists in extraction and processing and so on, have all resulted in dissuasion of the private sector, as the vanguard of economic development, to be present in this field Meanwhile, the mines sector enjoys innumerable potential capacities in terms of reserves and diversity of mineral items In my opinion, the mines and mining industry sector in competing with the oil industry can boost the economy and be even a substitute for oil Therefore, we remarkably increased the amount of investment in exploration so that currently we have drawn up plans for exploration in 200,000 km of land and launched parts of the operation We believe when the reserves are identified the private sector will be present enthusiastically.
Under the present circumstances the mining exploration conducted in the country is only %7 and this share for a country with extensive capacity of lead, zinc, copper, iron, gold and other rare materials is meager For this reason, we think that we have to conduct extensive operations in the mines and mining industries In the field of steel, we hold the 15th place in the world I'm sure that through sound efforts we can reach the goals of the 2025 Vision Plan, namely plus 50 million tons production In the field of copper, too, we can accomplish our plans sooner or in the exploration we can discover new mines and reach a place we deserve In the field of aluminum due to high gas reserves and its low cost, we hope to improve our stand in the world Sixty-eight mineral substances have been explored in the country, which seems to be mostly rare elements in Iran.
The hardware section of mining, namely drilling and transportation machinery and equipment, is among important and strategic parts of development and renovation. In the meantime, there is no doubt that international sanctions have inflicted heavy blows on this sector along with other sectors. As a result, in addition to the past mismanagement, the new management has inherited a series of disorders to organize which you need special work force, capital and time. What mechanisms have you adopted to deal with these disorders?
One of the problems facing mining production is that most of the equipment and machineries are imported from Europe and Western countries and the sanctions are hampering their import while the mining equipment has nothing to do with the nuclear issue .Therefore, making investment in the field of manufacturing mining machinery can be effective in realization of the perspective to boost mining industry.
In fact, one of the most important problems in the way of the mining sector in recent years has been non-application of modern equipment and advanced technologies while old and second-hand machineries are being used in many of the mines some of which have been used in other countries for over 50 years . This has been turned into one of the difficulties in the operation of the mines.
Sanctions and the rising price of the exchange rate was a precious opportunity for the mining sector to show its relative advantages and strength. It should be admitted that the emphasis placed by industrial experts and managers on the development of infrastructure and strengthening of industrial and production foundations in recent years has been very appropriate and left positive impacts on the industrial development.
To this end, in February last year IMIDRO signed a memorandum of understanding with Bank Tejarat for 1600 billion rials facilities to import mining machineries Moreover, in order to promote such facilities the organization in the beginning of the current Iranian calendar year (started March 2014 ,21) entered into negotiations with Bank Mellat and signed a contract for 2000 billion rials facilities to purchase new mining machineries Meanwhile, payment of %80 facilities for the purchase of mining machineries is also among measures taken by IMIDRO Development of mining sector requires major investments and signing of these contracts will be considered great strides towards realization of these development targets.
On the one hand, manipulation of the nature and destruction of the environment is a main concern of environment protection advocates. Development of mines and related industries has always fanned the flames of such concern. On the other hand, work in the mines sector is considered one of the hard and unbearable occupations. The lives of thousands of mine workers are at stake both in terms of health and safety every day. Are your plans in coordination and compliance with plans and instructions of the environment protection and health organizations? If so, could you please specify what measures have been taken in this regard?
Safety and health are considered human assets and protection of the environment is among priorities of IMIDRO Such an important task has always been a center of attention of operational units and development plans and so far, special attention has been paid to the health, safety and environment (HSE) in the companies and units affiliated to IMIDRO Our role in industries and mines is clear and by fulfilling our duties, we can protect the environment and safety of our workforce in the area of mine and mining industries We are working towards sustainable development and protection of human and financial resources.
Therefore, in order to accomplish this strategic and important line of thinking, last year and at the beginning of the administration of the 11th government a directive on HSE requirements was issued to IMIDRO affiliated units and all managers were urged to supervise over and ensure proper implementation of the instructions The directive has emphasized that all the IMIDRO units are obliged to use the existing mechanisms in order to control and reduce emission of greenhouse gases (processing and fuel combustion) Besides, observance of clean air standards, executive regulations for preventing air pollution and for climate change of Kyoto Treaty are all mandatory in all the affiliated units In accordance with this directive, establishment and maintenance of the environmental management systems ISO 14001 and professional health and safety management OHSAS 18001 are mandatory in all companies and projects that are put into operation.
On the other hand, application of any asbestos in the process of production is prohibited and the affiliated units are duty bound to allocate at least %10 of the total area to green space The subsidiary units too are required to consider, simultaneously with the selection of new equipment and technologies, their specifications in the field of chemical and physical pollutants, possible outputs and control methods According to the directive, compliance with the law on waste management and its relevant regulations is mandatory for all affiliated units; any measure, which may cause water pollution, is prohibited; and wastewater management and relevant regulations concerning prevention of water pollution are mandatory.
Mines are among the main economic sectors exploration to exploitation of which requires huge investment with high risk. Therefore, financial corporations such as banks are not much interested in entering into this sector and the private sector in the absence of reliance on these financial corporations are not capable of making investment in this sector. What are your plans to cope with this challenge and attract domestic and foreign investment?
The banking system has some problems The first is the arrears, which have more or less locked the banking system At present there are about 1000 thousand billion rials of arrears As a result, the banks cannot inject new sums of money into the mining industries.
The second issue is the high interest rate, which is of course acceptable to some extent as the inflation rate is high and people’s deposits should be returned However, these rates of above %20 will cause mineral industries to become both uneconomical and uncompetitive These factors have undermined investment The third point is the bureaucratic banking system In the advanced countries, banks are in fact the main factor for investment and development The investor will put in a maximum 10 to 15 percent and the remaining will be paid by the banking system.
In our country due to the existing crisis, the monetary system is unfortunately faced with too many restrictions and deficiencies One of the biggest problems is that our banking system is not connected to the international network and therefore we cannot use the world resources One of the factors for the success of China, which has experienced a growth rate of above 10 percent and even 13 and 14 percent for years, is that its reserved forex resources has increased to several thousand billion dollars and thus advanced countries of the world count on China.
What is the procedure with participation and exploitation in the field of precious metals particularly for the private sector?
Special attention is being paid to precious metals in the world. In our country precious metals and rare materials like gold, silver, titanium and vanadium are very precious and worthy. Yet, little work has been done in this field and even the private sector has paid little attention to the issue Except for uranium, the private sector is authorized to enter into the field of precious metals and there is no problem in this regard.
The mining industry has the final say with regard to sustainable development both in terms of steel and cement production for development of housing, railway and metro network; or in terms of copper production for development of electricity grid; or in terms of sand, gravel and bitumen production for development of roads However, this sector has not received due attention and its importance has not been properly underlined in the media What are your plans for further recognition of this organization?
Yes, I must admit this Statistics, which are released in the field of mines at their best position, cover about one percent and by taking the mining industries into account six percent, which is meager In advanced countries, the figure will even reach %20 This shows that more efforts should be made in this regard especially because this industry is a vanguard of development In fact, a mine can generate tens or hundreds of industrial units or create high employment opportunities Besides, it can prepare the ground for trade and export.
During the past year a number of events happened One was the approach toward the “economy of resistance” part of which is reliance on mine and mining industry capacities and the other part is the attention of the government and Majlis to this field We hope that the Sixth (Development) Plan will pay special attention to this field By this, I don’t mean they should allocate more money; rather grounds should be prepared for investment and development through legal mechanisms and reform of certain regulations In the Mines and Mining Industries Development and Renovation Organization, the Industries Development and Renovation Organization and Petrochemicals we have good articles of association and thus we can play a leading role We do not need new rules and regulations However, some of the regulations should be revised and some others should be removed.
IMIDRO experts and professionals have gained access to valuable experiences in the field of discovery and extraction. Has transfer of technical knowhow been placed on the agenda of your organization?
Workforce is considered one of the main assets of any organization and the same goes with IMIDRO. We pay attention to this issue and draw up plans to further increase and broaden the knowledge of our staff every year by organizing educational training courses.
These efforts have now born fruits and have enabled IMIDRO to use the expertise of its specialists in implementation of many projects in the field of mines and mining industries by domestic workforce Furthermore, in some other sectors such as cement and steel, we have gained access to technical knowhow and export technical engineering services outside our borders Among such efforts, mention can be made to the establishment of cement factories in Syria and Venezuela The cement factory in Syria has become operational and the Cerro Azul cement factory in Venezuela has gone through experimental operation and will soon be commissioned in the presence of high-ranking Iranian and Venezuelan officials The factory, which has a capacity of one million tons annually, has been constructed by experts of “Ehdas Sanaat” Company which is affiliated to IMIDRO and is among advanced projects in the world.