Iran private iron ore miners left high and dry

19 June 2017

Iranian iron ore sector has experienced tough times in the last few years. Mr Bahram Shakouri deputy head of Iranian Iron Ore Producers and Exporters Association was quoted as saying by Bourse Press that “Of the 145 small and medium iron ore mines operating in the fiscal year 2013-14, only nine are still producing.”

The official noted that small and medium mines had created close to 8,000 jobs, at least 5,000 of which were lost following the mines’ closure.

Mr Shakouri said Iran produced close to 52 million tons of iron ore in 2013-14, 65% of which were made by small and medium mines. He added that “The smaller mines also accounted for 85% of the sector’s employment.” According to Sajjad Ghoroqi, a member of IROPEX, private miners control over 60% of Iranian mines with less than 1 million tonnes of reserves. He said that “The rest, with reserves from 1 to over 50 million tonnes, are either completely state-owned or run by quasi-state entities.”

Nearly all small mines are privately-owned and susceptible to closure under the current tough market conditions. Most of the operational iron ore mines, however, are state owned and capable of weathering financial hardships by sweeping potential losses under the rug.

Mr Shakouri believes that high taxes and improper policymaking are the root causes of most of the mining industry’s woes. He said that “Depressed global mineral prices, export restrictions, high royalties, rising taxes and lack of crucial infrastructure such as water, electricity and rail transportation have all caused Iran’s mining industry to lose its competitive edge, leading to loss of jobs and lower productivity.”

Iron ore prices came out of 2015 the lowest in years, as it dropped to about USD 30 per tonne in December. The steelmaking material took on a positive trend early last year and over signs of China’s cutbacks in its steelmaking capacity reached USD 60 to USD 65.

The commodity continued its seesaw trend until it started to rise sharply in late 2016 and hit highs reaching up to USD 90 per tonne.

Source : financialtribune