Why the mining sector has failed to attain its due position in Iranian economy?
One of the advantages of Iran is the diversity of its minerals to such
an extent that out of Mendeleev’s Table close to 70 minerals are
available in the country. Nevertheless, so far serious exploration work
has been conducted only on 10 to 15 of these minerals. This is while
even on these elements, exploration work has been carried out at
superficial level. In fact, one of the main reasons behind negligence
towards the country’s mining sector and inadequate investment in this
sector is presence of massive oil reserves. The mining sector has always
been in the shadow of oil and recently of gas sectors and with regard
to state-run structure of the economy, there have not been sufficient
mobility and dynamism in the mining sector.
Another reason behind lack of investment in the field of mining,
especially in exploration area, is the high risk of investment which has
caused the mining sector to lose its attraction in comparison with
other investment markets. As long as the bank interest rates stand at 28
to 30 percent, this sector will not be able to attract the private
sector capital.
The government in the past eight years has practically kept distance
from the area of mining exploration and large mining industries and the
private sector has not been able to fill in the gap of the public sector
during these years.
Development of mineral
industries is in dire need of huge investment; don’t you think IMIDRO’s
involvement in development projects would result in enlargement of
government?
I do not believe that the government should be enlarged. A smaller and
more dynamic government would be more efficient. The government should
play a leading and commanding role. However, when there is no proficient
private sector in the country to implement major national projects;
when there is no efficient banking system with links to the
international banking system and capable of handling huge amounts of
capital, and when we are faced with the sanctions, restrictions in
transfer of money, and infrastructural shortage I believe the government
cannot refrain from playing its role in the development of economy.
The government should support major projects. The government should
contribute to the exploration field, which has a high risk. Obviously,
when the government carries out preliminary exploration studies, the
risk level would reduce to less than 50% and the project could be
transferred to real private sector.
More than 3,000 mines are privately administered, why there is so much sensitivity over transfer of 15 large state-owned mines?
First of all, in the transfer of these mines and mineral industries
competence must be taken into consideration and the work should be
handed over to capable companies. Meanwhile, I believe that in major
investments the government should maintain a share of up to 20%. Iran is
a developing country and it should not pose as a developed nation.
Prescriptions suitable for developed countries could not be applied to
Iran. If you review the combination of the shareholders of privatized
companies in Tehran Stock Exchange you will find out that the number of
petty shareholders hardly stands at 20% and the rest are big
shareholders. The best model of privatization is to turn state-owned
companies into public joint stock companies and transfer them to TSE.
Beside these measures, strong regulations should be formulated to
support the rights of consumers and prevent monopoly. These two issues
are unfortunately overlooked in our country.
The method of calling for tender so that major quasi-governmental
companies hold control of the mineral industries in the country is not
called privatization.
Do you have any specific plan
for participation of the private sector in this field and for
privatization of 15 major state-owned mines?
Through pathology of the trend of privatization in the past, we have
changed the process of privatization and transfer and are engaged in
ceding 10 big mines. At present, we have two types of transfers in
IMIDRO. Generally, in mineral industries we have acted on partnership
basis. For example in the field of Sangan iron ore mines, we have put
the mineral concentrates and pallet industries up for partnership and
the amount of government share there will be less than 50%. In transfer
of mines, we have generally tendered the task of exploitation and the
winner can make investment and start operation within the framework of
macro policies of IMIDRO. They will pay the exploitation right to IMIDRO
while the private sector will bag the profit for a long time.
Is there any need for the presence of government in all development plans of mineral industries?
We do not believe in the presence of the government. The government
grants loans to its development companies such as IMIDRO, IDRO and
petrochemicals and these companies make investment in line with
strategic plans and macro development targets. The law has allowed us to
make up to 49% investment in development projects. We have requested
that $5 billion be given to IMIDRO from the National Development Fund as
loan and return it after completion of the projects.
What is the responsibility of IMIDRO in formulating development strategy and the mining industry plan?
As a developmental organization, we consider making investment in the
field of research and education and formulating plans for exploration
and extraction as one of the responsibilities of IMIDRO.
Of course, this does not mean intervention on behalf of IMIDRO but
rather an attempt to support and guide activists in this field for
partnership and investment.