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Trying to boost Iran’s Aluminium Production

Temmuz 29, 2019 admin Aluminium

Iran currently produces about 350 thousand tons of primary aluminium and is in the process of increasing this with new Greenfield smelters and expansions with a target of 1.5 million tons by 2025 which needs USD 10 billion investments and Iran is planning to attract foreign investors and financers for this huge investment investment.

Today, the Middle East is producing about 9 percent (5.1 million tons in 2015) of the total 57 million tons of primary aluminium produced in the world in 2015. Considering the plants, which are presently under construction in the region it is expected that the Middle East’s contribution will grow to more than 10% of world primary production by 2020.
The growing demand for aluminium in Iran due to the expansion of markets as construction, transportation, food, pharmaceutical and electrical industries has increased per-capita consumption in the country. At present per capita consumption of aluminium (primary) is 4.3 kg which is far from world average of 7.6 kg and 27 kg of north amerce. Per capita consumption of aluminium semis is about 5.1 kg. There is very great potential for increasing domestic consumption.
Iran, with its enormous resources of oil and gas along with its geographic and strategic location, appreciable amounts of raw materials, well educated work force and market demand from Asia, makes Iran, with its population of 80 million, one of the most important and promising countries in the Middle East for foreign investment and joint ventures especially in the aluminium industry. Iran has the world’s largest natural gas reserves. Aluminium as one of the highest energy consuming industries has had many challenges over the past 30 years and is now experiencing an upturn in the country.
Following major developments in steel and copper industries during the past decade, Iran is now paying particular attention to the aluminium industry due to its high value added content and the needs of the country and region.

Primary aluminium
Iran’s current primary aluminum capacity is 470 thousand tons. Two main aluminium companies in Iran are Iralco (Iran Aluminium Co) with more than 40 years of aluminium smelting experience and Almahdi Aluminium Co in Bandar Abbas near the Persian Gulf. Iran’s total investment to achieve 470 thousand ton capacity in aluminum industry is USD 2.7 billion. Last year Iralco’s and Almahdi’s production were around 182 thousand tones and 171 thousand tons respectively (totally 352 thousand tones). These figures are below the 470 thousand tons of Iran’s primary aluminum capacity and it indicates 75 percent capacity utilization. Shortage of bauxite and insufficient electricity generation is the main reasons for low utilization rates. Lack of enough attention to sustainable electricity supply from government side is obvious. This means that aluminum plants should have power plants for providing sustainable electricity beside aluminum smelters. Inattention to sustainable power supply through exclusive power plants as an inseparable part of aluminum smelters in the past years has caused problems for the industry.
Alumina is the main raw material for aluminum production. Given that Jajarm is the only unit for production of alumina powder with a capacity of 270 thousand tons per year, it is not sufficient to meet demands of the industry and therefore provision of this important material through participation in the extraction of bauxite reserves of other countries owning such deposit is vital for the development of aluminum production capacity. Considering that the operation permit for 500 million tons of bauxite reserves in Guinea has been granted to Iran it has put the country in a highly proper and competitive position in the world for production of this metal at regional and global level. Investment in processing bauxite and transferring it into alumina powder will create a vital leap towards development primary aluminium production. Meanwhile, conclusion of long-term contracts with an aim of meeting alumina demands required in this industry can be a viable solution in the medium-term. However, using oil wastes to produce coke required for carbon anodes through establishment of relevant plants, construction of cryolite and aluminum fluoride will lead to the completion of the supply chain and create an advantage in aluminum production industry.
Although there are problems facing this industry but the country can boast of considerable advantages when it comes to aluminium. It was one of the pioneers of aluminum industry in the Middle East. Iran enjoys cheap energy resources and access to international waters to import alumina and export aluminium products.
Iran is planning big for its aluminum industry, as it intends to attract USD 10 billion of foreign investment to increase annual aluminum production to 1.5 million tons by 2025 as per the goals set in the 20-Year National Vision Plan (2005-25).

Raw Materials
Bauxite, an aluminum ore, is the world’s primary source of aluminum. It is usually strip mined because it is almost always found near the surface of the terrain, with little or no overburden. As of 2010, between 70 percent and 80 percent of the world’s dry bauxite production is processed first into alumina and then into aluminum by electrolysis. According to United States Geological Survey, global bauxite reserves are estimated to be around 75 billion tons, with Guinea, Australia, Brazil, Vietnam, Jamaica and Indonesia holding the world’s biggest reserves. Iran, however, possesses close to 20 million tons of bauxite or less than 0.1% of the world’s total reserves, and its limited deposits
Bauxite and alumina procurement have always been one of the industry’s primary challenges. The country’s only developed bauxite mine is the Jajarm Mine located in the city of Jajarm in North Khorasan Province, with reserves of less than 20 million tons which are barely capable of providing enough raw materials for the industry’s current 350,000 annual aluminum ingot output. Mineral explorations undertaken during the previous two years have sparked glimmers of hope for finding new reserves, but long-term sustainability of the industry requires cooperation with global suppliers of bauxite and alumina. The government made its first foray into a foreign country to exploit a bauxite mine 25 years ago but was held back for years due to lack of infrastructure and high transportation costs. The effort to develop a bauxite mine in the West African nation of Guinea has not yet concluded. The 50-50 partnership with the Guinea government was recently renewed for another 25 years. The mine, possessing more than 500 million tons of bauxite, is located in Guinea’s Dabola City about 370 kilometers from the coast. Iran expects to issue a tender by the end of 2016 to build a pipeline in the African country to transport the bauxite mined to a port for shipment. The tender would be issued after an economic feasibility study is received from German consultants DMT GmBH.
Alternative to Bauxit, it is possible to replace bauxite with nepheline syenite beneficiation to produce alumina. Fortunately, reserves of about 1.2 billion tons of this mineral have been discovered in Sarab city of East Azarbaijan Province and investments have been made to extract this mineral. This could be just what the industry needs and would also considerably reduce domestic reliance on alumina imports. The government has put the Sarab nepheline syenite mine out to tender and is seeking foreign investors to undertake the project. Russian RUSAL Aluminum Company expressed readiness to cooperate with Iran in the production of alumina powder from nepheline syenite.
Anode, primarily made from petroleum coke, is one of the main raw materials required for aluminum ingot production and usually accounts for nearly 30 percent of production costs. IMIDRO has signed an aluminum cooperation deal with the French Fives Group; the agreement entails the establishment of a joint anode production company through an engineering, procurement, construction and finance contract. The anode plant, with a production capacity of 450 thousand tons per year, requires close to USD 400 million.
Secondary aluminium
Aluminium is known for its excellent recycling characteristics and it is the most recyclable material in the word. Secondary aluminium producers use aluminium scrap as raw material to produce aluminium ingots or products. Secondary aluminium production 92 percent is more energy efficient than primary production.
In Iran, there are a lot of small scale secondary aluminium plants which are producing aluminium or aluminium alloy ingots from recycled scraps. Total capacity of these plants is about 170 thousand tons. It is estimated that total production of these plant is about 100 thousand tons per year aluminium ingot.

Aluminum fabrications
It has a developed downstream market for rolled, extruded and cast products to satisfy its domestic market of 80 million people. The most common uses of primary aluminium are extruding and rolling. Aluminium can be extruded and shaped into a variety of tubes and profiles (aluminum longs) or can be rolled in a cold and hot condition to plates, sheets or foils (aluminium flats). Aluminium is increasingly taking over from copper as the preferred metal for tubing in heat exchangers and air conditioners. There is no end to what shapes aluminium can take. Aluminium is ductile and it can be rolled from 60 cm to 2-6 mm. Final foil products can be as thin as 0.006 mm and still be completely impermeable to light, aroma or taste. The metal itself forms a protective oxide coating and is highly corrosion resistant. Various types of surface treatment can further improve these properties.
Aluminium casting is another common use of aluminum. The properties of aluminium change when small quantities of other metals are added to produce aluminium alloys. These can give greater strength, brilliance and ductility, all depending on what the metal is to be used for. And they can make aluminium easier to form into an endless variety of products. The most common alloy materials added to aluminium are copper, magnesium and silicon. To increase quality, the grain refining substances strontium, sodium, or titanium/titanium boride, are added in small quantities. The raw cast product generally requires machine finishing and is often coated.
Today the market for aluminium products in Iran is predominantly governed by domestic demand. In addition, some private manufacturers take pride in their success in exporting products to Europe. Iranian manufacturers mainly produce products for day-to-day use such as aluminium foil for packaging, building sections, radiators and automobile components. High-tech products such as those used in the automobile industry are at present also produced by domestic companies.
Total downstream capacity in Iran is more than 1.034 million tons per year. Aluminium longs including profiles, sections, rod and wire and tube and pipe, account for 60.5 percent (626 thousand tons), aluminium flats including sheet, plate, coil and foil account for 11.6 percent (120 thousand tons) and aluminium castings including conventional and die cast account for 27.5 percent (285 thousand tons).

Rolled and flat semi products
At present, the annual flat rolling capacity of Iran is about 120 thousand tons (based on government licenses). But the important part of annual production is achieved in four rolling mills and a new commenced one which totally have 95 thousand tons capacity (80% of total capacity).
Navard Aluminum MFG Group with annual capacity of 26 thousand tons is the largest one. The plant is located in Arak city and produces strip from rolling slab via conventional hot and cold-rolling route. Finished products include roof sections, corrugated sheet and building elements. The company also commissioned a new plant to produce aluminium composite panels.
Aluminium Pars is the second largest aluminium fabricator and uses direct strip casters followed by cold and foil rolling equipment to produce packaging foil. Coiled strips, foils and coated strips are the most common products from this company. The capacity of the plant is 21 thousand tons per year and is located in Kaveh Industrial City, Saveh.
Pars Aluman Kar Company (PAKC) with 10 thousand ton capacity is another supplier of rolled aluminium products. PAKC founded in 1995 by and its plant is located in Boin zahra region in the West of Tehran. PAKC specializes in the manufacturing of different series of aluminum sheets and coils in various sizes and thicknesses.
Hezar Aluminium Industries Co (HAIC) with annual capacity of 8 thousand is equipped with advanced rolling technology. HAIC is located in Kerman and produces aluminium foil and flexible packaging.
Razan Saaf is a new commissioned aluminium rolling mill. The plant capacity is 30 thousand tons of aluminium rolled product and is located in Razan city of Hamadan province.
MGF Group, PAKC and HAIC companies have produced with their 60 to 80 percent of capacity in recent years. It is estimated that about 50 thousand tons of rolled products have been produced in 2015.

Extruded and long semi products
Extrusion companies in Iran are mainly privately owned and total capacity of extrusion plants are about 480 thousand tons but the output is much less than the capacity.
Capacity of aluminium sections is 27 thousand tons, aluminium rod and wire is 108 thousand tons and aluminium pipe and tube is about 10 thousand tons. Based on these figures, total capacity of aluminium longs is 517 thousand tons.
Market overview
Iran’s primary aluminium production was 353 thousand tons in 2015. At the same time about 17 thousand tons of aluminium ingots imported and 82 thousand tons exported. Based on these figures primary aluminium apparent consumption was about 288 thousand tons. It is estimated that about 153 thousand tons of old aluminium scrap plus new scrap from finished products is also recycled and melted in 2015. This means that total net input of aluminium ingot (primary plus secondary) in downstream industries was about 441 thousand tons.
85,000 tons of aluminum products have been imported in 2015 which 61 thousand tons of it are aluminium semis including 48.4 thousand tons flats and 12.6 thousand tons longs. Total imports of 2015 are 13 percent less than 2014 imports which was 98 thousand tons.
Exports of aluminium products in 2015 were 318 tons. Iran’s aluminium longs exports started to increase from year 2005 and reached its maximum amount of 9 thousand tons, but its growth stopped in 2010.
It is estimated that total output of semi finished products was 325 thousand tons which 132 thousand tons of it was aluminium longs (40%), 54 thousand tons was aluminium flats (16.6%) and 98 thousand tons was aluminium castings (30%) and 41 thousand tons was aluminium rod (10%).
Based on production and import export data, apparent consumption of aluminium longs was 145 thousand tons, aluminium flats was 102 thousand tons, aluminium casting was 123 thousand tons and aluminium rod was 41 thousand tons.
Utilization rates in total aluminium downstream industries are very low which makes the plants face with high OPEX and uneconomical operation. Utilization rates in aluminium longs, flats, casting and rod are 25 percent, 45 percent, 34 percent and 37 percent respectively. Average uti
lization rate is 31.5 percent.

Conclusion
When it comes to aluminium smelting industry, Iran enjoys advantages of its cheap hydrocarbon energy resources and natural gas reserves. Iran has invested USD 2.7 billion on its primary aluminium smelting projects to increase its capacity to 470 thousand tons and currently is planning to increase its production to 1.5 million tons by 2025 and is seeking for USD 10 billion to invest in aluminium. Iran has well developed domestic market to produce aluminium fabrications with a capacity of one million tons per year and economic growth will boost domestic demand for aluminium products creating fantastic opportunities for international investors to invest in Iran’s aluminium projects.

Considerable Copper Expansions Are Already Well Underway

Temmuz 29, 2019 admin Copper

Iran’s mining industry continues to go from strength to strength and in particular, the copper mining sector remains buoyant, with exciting expansion development already well underway.

Iran is considered to be located on the world copper belt which runs from the southeast to northwest of Iran and Azarbaijan. The Porphyry copper deposit of Sarcheshmeh is one of the largest of its kind in the world. Iran’s total copper reserves are estimated to be 21.7 million tons, making Iran to stand in the 8th rank of the world ranking.

Iran’s copper mine production increased to 251 thousand tons in 2015. Smelting and refined production was 236 thousand and 185 thousand tons respectively. National Iranian Copper Industries Company (NICICO) is the main copper producer in Iran which is ranked fifteenth in world latest copper companies ranking. NICICO also is the nineteenth largest smelter company and the twenty-third largest cathode producing company in the world.

22 million tons of copper reserves
Around 500 ore deposits and indications of copper are recognized in Iran, while; only about 100 of them are surveyed and explored. Presently, there are 10 active copper mines in Iran whose reserves amount to 3 billion tons of ore, containing 21.7 million tons of copper metal comprising 3 percent of the world’s known copper reserves. The deposits can be geographically divided into 6 major provinces: Kerman (which holds the largest reserves of the country), Azarbaijan (predominantly situated in the Ahar Jolfa belt, in the Arasbaran area), southern Khorasan, northern Sistan (only reconnaissance surveys carried out), Minab-Fahnuj (only reconnaissance surveys carried out), Sabzevar-Semnan (all are of vein type with no porphyry deposits yet reported), Tarom.
Sarcheshmeh Copper Mine, located in Kerman Province, is the world’s second largest and the Middle East’s largest open pit copper mine. The mine possesses over 828 million tons of proven ore reserves at average copper grade of 0.68 percent (5.63 million tons copper content) and total 1.06 billion tons of estimated copper reserves at average grade of 0.62 percent (6.59 million tons of copper content), alongside substantial amounts of minerals such as molybdenum, gold and rare metals. Sarchemsheh mine alone accounts for 21 percent of Iran’s total copper reserves. The mine was first discovered in 1928, but it was not until nearly 40 years later that detailed exploration projects were undertaken. In 1967, Kerman Copper Industries Company was established in partnership with a British firm, which led to the discovery of 400 million tons of copper reserves. It lacked the means and the financial capability to operate the mine and was therefore purchased by the government. In the early 1970s, state-owned Sarcheshmeh Copper Mines Corporation took over the mine and approached the American Anaconda Copper Mining Company to utilize its expertise in copper mining. The copper complex was established and production kicked off up until the victory of the Islamic Revolution in 1979, which brought about the nationalization of SCMC and Anaconda’s assets and the establishment of NICICO, currently Iran’s largest copper producer.
Songun is the country’s second largest copper mine located in East Azarbaijan Province, which holds over 632 million tons of proven reserves at average grade of 0.61 percent (3.88 million tons copper content) and total 823 million tons of proven and potential reserves with an average grade of 0.6 percent (total metal content is estimated to be 4.9 million tons). Songun accounts for 16 percent of Iran’s total copper reserves.
Miduk is the country’s another developed large mine located in Kerman Province and operated by NICICO. The mine type is open pit and its initial ore reserves were 170 million tons with average grade of 0.83 percent copper. Based on latest exploration data, 151 million tons of ore with average grade of 0.58 percent (878 thousand tons copper content) will be mined in the next 29 years. There is a concentrator facility with capacity of 150 thousand tons copper concentrate and a 5 thousand ton SX-EW plant in the complex.
Darreh Zar deposit can be considered as the third largest undeveloped mine in Iran in terms of copper metal content. It is located in central Iranian volcanic belt; 8 km of southeast of Sarcheshmeh mine in Southwest of Iran. Proven ore reserves are about 465 million tons at average grade of 0.37 percent (1.7 million tons copper content) plus 71 million tons of probable reserves at average grade of 0.32 percent (227 thousand tons metal content) and total 536 million tons ore reserves at average grade of 0.34 percent (1.8 million tons metal content). Although the deposit contains huge amount of metal content but low ore grade is its weakness.
The Chah Firouzeh porphyry copper deposit located in 35 km north of Shahre Babak (Kerman Province) is the fourth largest mine in terms of metal content. Total estimated reserves of the mine are 378 million tons at average grade of 0.35 percent containing 1.3 million tons of copper metal content. Currently the mine is under developing. In October 2015, NICICO signed an investment agreement with the Middle East Mineral Industries and Mines Development Holding Co. (MIDHCO), Mahan Industries and Mines Development Corp., and Mofid Economic Group for construction of 100 thousand ton Chah Firouzeh copper concentrator plant in Kerman Province, southwestern Iran. The plant, which would be 65 percent owned by the three privately owned companies, was expected to begin operation by 2019.
Nochon deposit located in Kerman Province is the fifth largest deposit (555 million tons of ore at average grade of 0.27 percent, total metal content of 1.27 million tons) and Masjid Daghi located in East Azarbaijan is the sixth largest deposit (340 million tons of ore at average grade of 0.27 percent, total metal content of 0.98 million tons).
In terms of metal content Miduk stands at seventh rank of Iran’s copper deposits. Low grade of Dare Zar, Chah Firouzeh, Nochon and Masjid Daghi (varying between 0.23 to 0.37 percent) is the main obstacle of developing them.

Expansion projects, already underway
In last two years, by commissioning of phase two of Sarcheshmeh and phase two of Songun concentrator plants by NICICO, 310 thousand tons concentrate output capacity has been put into operation. The capacity of the Sarcheshmeh copper complex increased by 160 thousand tons of copper concentrate and 1.1 thousand tons of molybdenum concentrate, whereas that of the Songun copper complex doubled to 300 thousand tons of copper concentrate. NICICO has planned to increase its mine output from current 250 thousand tons to 300 thousand tons by end of 2016 and to 400 thousand tons by 2018.
The company was also in the process of building the 200 thousand ton Khatoonabad refinery in Kerman Province, and the 50 thousand tons of Songun SX-EW plant to produce copper cathodes from copper concentrate, which will increase the refined capacity to 440 thousand tons. By commissioning the flash smelting project in Sarchesmheh with 280 thousand tons plus expansion of Khatoonabad smelter from current 80 thousand tons to 120 thousand tons, total smelting capacity will be increased to 400 thousand tons of copper from concentrate.
In addition to mine, smelter and refinery projects, there are acid plants and fertilizer projects are being implemented by NICICO.
Some projects owned by other Iranian companies, especially in mining and hydrometallurgy are going on too. The biggest are MIDHCO’s projects which its concentrate leaching plant will be a first in terms of technology in the world. The plant’s capacity will be 50 thousand tons of copper cathodes.

Copper production hitting new records
Iran is the leading copper producer in the MENA region. In 2015, the country’s copper concentrate output increased by 19 percent to one million tons from 838 thousand tons of 2014. Copper anode output from concentrate did not change from 193 thousand tons of 2014 and copper cathode output stood at level of 197 thousand tons of 2014.
According to the latest statistics, Iran’s copper concentrate output in the first four months of Iranian calendar (March 20 to July 21, 2016) was 371 thousand tons indicating a growth of 22.84 percent against 302 thousand of the same period last year. Sarcheshmeh, Songun and Miduk complexes were the main producers of copper concentrates. Concentrate output stood at 94 thousand tons in the month to July 21, showing a rise of 11 percent compared to the figure for the same month last year which was 84 thousand tons. The smelter output in Sarcheshmeh and Miduk complexes stood at 78 thousand tons. Refined output was 60.5 thousand tons of copper cathodes during the four-month period.
By new projects coming on stream there will be a significant increase in Iran’s copper cathode production in the next few years. Capacity expansion in mining and refinery capacities, will lead to faster increase in domestic market cathode surplus. It is predicted that refined copper consumption will grow by 4.8 percent annually in the next decade. Cathode export is expected to reach 265 thousand tons by 2021 which is 9 times greater than what happened in 2015.
In 2015, UAE, China, Oman and Turkey were the main export destinations of Iran’s copper cathode. By removing the sanctions, it is expected that exports to UAE will drop and on the other hand, exports to China and other consuming markets will grow.
Middle East countries imported more than 530 thousand tons of copper cathodes and about 470 thousand tons of semi-fabricated copper products in 2015. Turkey was the largest importer with imports of 347 thousand tons of copper cathodes and 93 thousand tons of copper and copper alloy semis in 2015.

Copper semis, huge capacity but low utilization rates
Main copper semi products are copper rod, copper and copper alloy sections, copper and copper alloy flats and copper tubes. More than 120 copper and copper alloy semis fabrication plants have been established in Iran; their total capacity is more than 940 thousand tons. Copper rod with 590 thousand tons capacity has the biggest capacity. Copper rod manufacturers produced 107 thousand tons of rod in 2015 which indicates very low capacity utilization rate of 15 percent. Total capacity of copper and copper alloys section is 40 thousand tons. In 2015, 28 thousand tons of copper sections produced in Iran with capacity utilization rate of 28 percent. Copper tube industry has the worst output; by producing just 8 thousand of copper tubes in 2015, the utilization rate was 7 percent.
In the past 5 years, Iran’s copper semis production has decreased by an average rate of 6.6 percent per year. Economy slow down and the effects of sanctions reduced production and consumption of copper semis in the past few years.
By commissioning new copper semis fabrication plants in the last decade, imports of copper semis has decreased to less than 5 thousand tons in 2015. Copper semis exports and imports have decreased in the past decade steadily. Copper Semis exports, declined from 22 thousands of 2011 to less than 5 thousand tons in 2015. Significant and sudden growth of foreign currencies against Iranian Rial was the main reason for sharp increase of copper semis exports in 2011.
Copper and copper alloy flats, are the main imported semis to Iran; on the other side, copper rod and tube, are the main exported semis from Iran.
In the past five years, more than four times of imported semis quantities have been exported; this indicates that Iran’s domestic market is over supplied by copper semis.
About 85 percent of copper and copper alloy semis exports from Iran are exported to neighboring countries. Aggregate quantity of experts of past five years was about 54 thousand tons. But in the same period, only 45 percent of imported semis to Iran came from neighboring countries. Less than 13 thousand tons of these products imported to Iran in the mentioned period. Turkey and UAE are Iran’s main trading partners.
In February 2016, NICICO signed a memorandum of understanding with Germany’s Mansfelder Kupfer und Messing GmbH (MKM) on a USD 1.1 billion investment to the develop a downstream copper fabrication plant in Iran and delivery of 70 thousand tons of NICICO’s copper cathode to MKM.

Conclusion
Currently, there is about 780 thousand tons of in-active capacity of semi-fabricated products. By domestic demand growth a part of this capacity will be activated in the future. The Iranian government continues to support the downstream industry, cheaper cathode pricing mechanism is obvious in domestic market and copper consumers enjoy an advantage of 2 to 3 percent cheap grade A copper cathode.
In the next few years, lower inflation rates and better trade relations with the world, will lead to a significant increase in exports of copper products from Iran. It can be assessed as an opportunity for foreign companies to benefit from the profitability of copper business.
Exploration and exploitation of new copper mines, supporting industries of copper mining, smelting and refining businesses and exports of copper products will be the biggest investment opportunities in Iran’s copper industry.

Iran the Most Unexplored Mining Giant in the World

Temmuz 29, 2019 admin Mining

Iran holds over 68 various types of non-petroleum mineral resources, which in aggregate absolute weight stand at roughly 27 billion tons with a potential weight of up to 57 billion tons as it’s been estimated. In particular, Iran’s mineral wealth is focused on zinc, iron ore, copper, chromite, aluminium, cement, limestone and is the highest ranking in globally production of turquoise. Iran has long focused on the oil & gas resources, with little attention given to its mineral wealth. This huge mining potential caused Supreme Leader Ayatollah Ali Khamenei to suggest that the country’s significant potential in mining should be realized as an alternative to oil.

Iran’s mining potential has put Iran on the list of the 15 wealthiest countries, when it comes to mining reserves. Plus, some 11 percent of the world’s proven petroleum reserves and 18 percent of its proven gas reserves belong to Iran. It’s true that the oppressive sanctions against Iran have thwarted Iran’s economic plans but mining activity has been going on in the country over all these sanction-ridden years, so much so that there are currently some 5,000 active mines in Iran.
In light of the country’s 20 year development outlook plan, Iran is looking to become a major global contender in terms of mineral industries and is bound to attain competitive conditions fast. At the moment, the administration of Mr. Rouhani, has sent the country’s sixth development plan to Parliament to be passed as a law. The designers of this major plan, have charted the necessary levels of industrial expansion essential for accomplishing those grand industrial objectives, as being somewhere around 12 percent. Moreover they’re of the opinion that in the course of reaching that target, there should be an annual economic growth of up to 8 percent minimum to enable that.
Given the vastness of god given resources that Iran enjoys, it’s no wonder why many foreign companies would be potentially enough interested to invest in it. In addition to enormous iron and copper reserves, Iran enjoys a wealth of 200 various mining sites, which yield a variety of 33 products. These are gold, silver, turquoise, ruby, sapphire, agate, etc. This is not to forget, other more industrial-grade valuable mineral commodities, such as titanium, uranium, manganese, zinc, and many other items, which taken together can help wean Iran off petrodollars.
Huge potential of iron ore, aluminum, copper and zinc
Iran with roughly one percent of the world’s population holds more than 7 percent of the world’s total mineral reserves. Iran’s deposits that are largely underdeveloped include zinc (world’s tenth largest, reserves of Mehdiabad is not included), copper (world’s seventh largest), iron (world’s eighth largest), uranium (world’s tenth largest) and lead (world’s eleventh largest). There are approximately 5,000 mines in operation in Iran, with 12 metals and 36 non-metal ores currently being exploited. The potential is huge for investors and mining companies.
In 2014, 400Mt of minerals were extracted, making it one of the leading mineral producers in the Middle East. Iran is one the 15 most mineral rich countries in the world, with mining products representing more than 30 percent of the country’s non-oil exports, employing more than 100,000 people directly and up to half a million indirectly.
According to WSA (World Steel Association) in 2014, Iran’s iron ore output was 48.5 million tons of iron ore, making it the ninth largest iron ore producer in world ranking. There are over 200 ore deposits, indications or anomalies of ore in Iran, with total estimated reserves of 4.5 billion tons of iron ore. The average grade of iron in these reserves varies from 45 to 60 percent iron. Roughly, Iran accounts for 2.7 to 3 percent of the world’s total iron reserves, but contributes only one percent to global production. Gol Gohar iron ore mine in Kerman Province in south-eastern Iran and Chadornmalu iron ore mine in central Iran, the two largest iron ore mines in Iran, produce 80 percent of Iran’s total iron ore output.
Iran’s main reserves of bauxite are located in the northeastern city of Jajarm, North Khorasan Province; these reserves are very limited. Lack of enough reserves always has been considered as a threat to aluminum smelting business in Iran. Although there is lack of bauxite reserves, Iran is relying on its energy sources to expand aluminum smelter capacity and there are some large aluminum projects. The implementation of development projects can boost aluminium production to 1.5 million tons by 2025 and turn Iran into one of the top 10 producers in the world.
Iran Alumina Company, currently the major supplier of alumina to the country’s giant aluminum smelters such as Iralco and Almahdi, has been granted to extract Jajarm bauxite reserves. But since the company is planning to establish smelter to produce aluminum ingots in order to complete its value chain, it would probably consume its entire alumina and therefore other aluminum producers will be forced to import all of their required raw materials. What is certain is that the country needs more bauxite reserves to produce more alumina so officials are been moved towards overseas reserves. Iran has an agreement with Guinea Conakry in Africa to explore and extract 600 million tons of bauxite reserves.
When it comes to copper, Iran has some big world class mines. The country is located on one of world’s well-known copper belts, which stretches from the northwest to southeast of Iran and then enters into Pakistan. Iran accounts for approximately 22 million tons of copper reserves or about 3 percent of the world’s total reserves. Copper ore production in Iran accounts for 75 percent of the total production in the Middle East. National Iranian Copper Industries Company (NICICO) is one of the largest companies listed on the Tehran Stock Exchange and was the largest non-oil exporter in Iran in 2010 with exports worth USD 1.3 billion. The biggest copper mines are Sarcheshmeh (Kerman Province), Miduk (Kerman Province) and Songon copper mines (East Azarbayjan Province).
With approximately 3.6 million tons of zinc metal content and 1.5 million tons of lead metal content, Iran has just 1.8 percent of world zinc (world tenth) and 1.5 percent of world lead reserves (world eleventh). Angoran mine, Irankouh mine and Emarat mine are three big lead and zinc mines which are currently being exploited. However in possess world largest undeveloped Mehdiabad lead and mine resource. The mine is a world-class oxide, sulfide and mixed oxide/sulfide zinc, lead and silver deposit. It has more than 400 million tons of reserves, 70 percent of which is zinc and the rest are lead, silver and barite (165 million tons proved reserve with higher than 7 percent grade and 400 million tons of probable reserve with lower than 7 percent zinc grade, about 4 percent). Operation at the mine started several years ago after a joint venture was formed between the Australian company Union Capital Limited and Iran mining and engineering company Itok. But after the two investors demanded that the government give up the ownership of the mine, the operation in Mehdiabad came to a halt so Iranian Mines and Mining Industries Development and Renovation Organization (IMIDRO) as the owner of the mine terminated the contract and called for a new tender.
Currently Angoran mine is the main supplier of lead and zinc ore for processing facilities but based on last reserve estimations, the mine life will be ten years. After depletion of deposits of Angoran mine, Mehdiabad is supposed to be the main supplier of zinc and lead to domestic industries.

The most unexplored
Despite being among the most resource-rich countries on Earth, Iran is also one of the most unexplored mining rich. Less than one-tenth of its surface area has been fully surveyed so far. This has caught the attention of many foreign investors and global mining firms, such as Rio Tinto, which have visited Iran for talks with officials.
The systematic geological study of Iran only started in the 1960s after the geological survey of Iran was established. There are 6 distinct phases of mineralization in Iran from the Early Cambrian to the Quaternary.

Mine as an alternative to oil
Supreme Leader Ayatollah Ali Khamenei suggested that the country’s significant potential in the mining sector should be realized as an alternative to oil. “The oil market, which falls from $100 to $40 following a sign from world powers and then actions by wicked elements in the region, is by no means reliable and we have to find an appropriate alternative. The mining sector is the best alternative,” Ayatollah Ali Khamenei said in a meeting.
The mining sector is expected to play a pivotal role in Iran’s economy but because of the dominance of the oil sector, the share of mining has been reduced to a negligible figure, especially since sanctions have limited any form of international funding to allow international mining giants to pro-actively invest in Iran.
From 1997 to 2001, the share of mining (as a percentage of GDP, based on current prices) remained around 0.66 percent, whereas the figures based on the fixed prices of 1990 have grown from 0.97 percent to 1.25 percent. Given the natural riches of Iran, mining’s mere 1 percent share of GDP cannot be considered as appropriate and offers immense opportunity for growth and reveals the potential demand for investment in the sector.
Policies are changing
The existing public enterprises and large state-owned market players are no longer the most efficient way of running the economy and that Iran believes a wide-ranging reform is necessary for its economy to attract foreign investment
This is particularly poignant at present given the substantial drop in government oil revenues in the last few years. By the end of the current Five-Year Development Plan, which began in 2010, the government expected to boost the mining sector’s contribution to GDP to 4 percent as well as total mineral production to 500 million tons.
Some big investment proposals have already been floated such as USD 3 billion investment proposition by National Aluminum Company of India (one of the largest trading partners of the country).

Obstacles which changed to promotions
Restrictions exerted by the constitution of the country on investment by foreign financial institutions had formed the major obstacle till 2001 but the Foreign Investment Promotion and Protection Act, which was passed in 2002, gives foreigners 100 percent ownership rights, residence visas valid for three years and the opportunity to transfer their profits out of the country in foreign currencies. It also offers a number of tax exemptions that, in some conditions, can rise to 100 percent of an enterprise’s profits. In an effort to reassure investors even further, the act guarantees that the government will pay compensation for any investments in projects that are nationalized or expropriated.
Currently, 90 percent of the country’s mines are in state hands (predominantly through Iranian Mines and Mining Industries Development and Renovation Organization (IMIDRO)) but the government publicly stated in 2015 its intentions to further develop the sector through private and foreign investment-in particular copper, iron ore and aluminum; IMIDRO will be the arm of government to attract private oe foreign investment.
Mehdi Karbasian, Chairman of the board of IMIDRO, said that Iran has extensive plan for mines and mining industries sector development which requires USD 40 billion investment to develop steel, aluminum, copper, zinc and mineral sectors related to mine sector such as exploration and infrastructure affairs which could be a foreign Iran joint venture opportunity. IMIDRO provides proper conditions for obtaining the required licenses based on priorities. All steps of investment and investment attraction process will be performed under the law of foreign investment attraction guaranteed by the government of the Islamic Republic of Iran for return or outflow of capital from country.
The sixth development plan and development projects in Iran’s mines and mining industries sector are appropriate opportunities for foreign investors; Karbasian said.
Iran in the sixth development plan starting on March 2017, seeks to attract USD 250 billion investments in oil and gas, infrastructures, industries and mines and mining industries sectors. This create a golden opportunity for foreign firms such as banks, equipment suppliers, investors, insurances, etc., which lead to development of bilateral strategic and long term relations.

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