Deputy minister of industry,
mine, and trade, Mehdi Karbasian blames the 50% decline in global iron
ore prices, sharp declines in the global prices of copper cathodes and
concentrate as well as the significant decrease in China’s demand for
the decline in Iran’s export of mineral products during the outgoing
Iranian year (ends March 20), IRNA reported.
“The regulations imposed by the government are not the only cause of
decline in the export of mineral products as other factors have also
affected exports, said Karbasian, who also heads the Iranian Mines and
Mining Industries Development and Renovation Organization (IMIDRO)
Conditional Sale of Raw Minerals
Noting that exporting raw minerals is only reasonable if the revenues
are invested by the mining companies in processing sectors, Karbasian
said: “We should not prevent these companies from temporarily selling
their raw products.”
He added that considering the limited resources in the country for
investment in the industrial and mining sectors, IMIDRO, as the major
producer of many minerals, is striving to improve relations between the
administration and the parliament, in a bid to make the best decisions.
Parliament recently passed a law based on which all iron ore mining
companies are required to pay up to 25% value of their extraction to the
government as mine royalty. The parliament has made the decision as a
measure to confront and prevent the export of raw materials, as it has
provided royalty discounts for the miners that invest in processing
units to produce iron ore concentrate, iron ore pellets, and sponge
iron.
Competitiveness Suffers
According to Karbasian, the global decline in iron ore prices has
rendered Iran unable to compete with countries such as Australia and
Brazil which have increased their iron ore export to China
substantially. He suggested that no export tariff should be levied on
iron ore exports under the current circumstances to help the exporters.
The main drawback is transportation costs. While Australia and Brazil
transport their iron ore via bulk carriers with capacities ranging from
300,000 to 400,000 tons, Iranian cargo ships can carry only about 50,000
tons of the mineral.
Chinese Bureaucracy
The deputy minister also touched upon the issue of bureaucracy in
China, which has caused delays in the €3 billion finance China had
pledged to Iran’s steel projects. “Not even a single yuan has been paid
to the seven provincial steel projects over the past year,” stressed
Karbasian, adding that a special delegation will be sent to China to
follow up on the opening of the promised letters of credit (LC’s).
Last week, Chinese ambassador to Iran, Peng Sen, promised the IMIDRO
head that his country would soon solve the financing problems with the
People’s Bank of China, Sinosure, and China Development Bank to help
facilitate execution of the steel projects.
The Iranian official further said IMIDRO’s strategy for the upcoming
Iranian year (starting on March 21) is focused on attracting private
sector’s funds, in line with Article 44 of Iran’s Constitution, which
requires the economy to move towards privatization.