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NewsIran Lucrative Market Attracts Big Investors

Iran Lucrative Market Attracts Big Investors

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In a recent conference we attended in Zurich, out of the 200 investors present there I dare to say Iran was an attractive market for about 120 of them.

Iran is in possession of mineral resources, reserves, energy and other materials required by different industries. The country also has adequate power and possibility for achieving major industrial and mining progress. To accomplish this we just need sound and long-term planning.
Extraction of mines and mining has long been common in our country, and some of the historians have stressed that people of Iran were among the first to extract and melt copper. Many works of the massive drilling which are observable in most Iranian mines, especially lead and copper mines, as well as the remain of metal utensils and equipment further confirm the extensive industrial and mining activities in the Iranian Plateau.
The Iranian Mines and Mining Industries Development and Renovation Organization, known as IMIDRO, was established 14 years ago with an aim to further strengthen the mineral foundations and mining industries of the country. This giant complex has been successful in this sector to some extent but is faced with numerous challenges. Shortage of financial resources, the biggest global recession of raw materials, and the long years of sanctions are part of these challenges.
To get a deeper insight into the achievements and challenges in this sector, we interviewed Mehdi Karbasian, the main steersman of IMIDRO on the key role of the organization.

What is IMIDRO’s share of mining policymaking and what are its duties and authorities?
In fact, IMIDRO is the former ministry of mines and metals. Most of the duties and responsibilities of the former ministry were delegated to IMIDRO in 1380 (2001/2002). But given that over the past few years the ownership of most of the IMIDRO manufacturing units has been transferred in the name of privatization and to make up for its past debts therefore, IMIDRO is now a useful arm for the government and can be highly active towards realization of the ‘Economy of Resistance’; but it should be supported because in the field of major mining industries and big mines it should maintain active presence as an arm and consultant of the ministry (of industries) in decision makings and policy making.

Considering the recession in global mining markets, what solutions have you projected to come out of this recession?
We should admit that part of this recession returns to the domestic market. As you know, in 1394 (2015/16) this recession was intensified in the mining industries and one of its reasons was the global recession in the field. As an example we can mention the problems China created through steel dumping, as well as serious cuts in the prices of iron ore, aluminum, copper and other products. After that the buying and selling market was faced with trouble and ultimately this issue caused a very difficult year for the mining industries, particularly in the field of steel and copper.
Obviously, IMIDRO as a development organization and a shareholder in some sectors, or in the iron ore sector, in fact should receive government income as the usufruct. In large mines or major mining industries IMIDRO fulfilled a satisfactory cooperation.
About a debt moratorium, and solution of problems we have informed the authorities. Despite cooperation and empathy between the different units, again the calendar year 1394 (2015/16) was a difficult year. In fact, some of these units had huge debts to IMIDRO and we put it behind through understanding and with moratorium.

What is your predictions regarding recession this year?
According to our forecasts, problems will more or less continue in the first half of the current calendar year. Although in the field of steel and iron ore the situation has somehow improved but still it is not enough. Fortunately, the Joint Comprehensive Plan of Action (JCPOA) has been effective to a great extent in the field of product sales outside the country and exports. In the area of imports too, costs have been reduced but we should accept that the main problem of the production units and mines is liquidity and this crisis still exists.

IMIDRO had previously signed MOUs in the fields of steel, aluminum and copper with European countries and China. In what stage are these agreements now?
Fortunately, we have signed good MOUs with creditable international companies especially since 1392 (2013/2014) but after the JCPOA (Iran Deal) there have been more agreements. We have signed good MOUs with prestigious international companies, including Italian, French, Korean, Indian, etc. We expect to ink good contracts with Austria in future.
The point here is that our discussion is more over investment cooperation. We should accept that as long as money is not transferred easily, operational trend of investment will be slow. Fortunately, after President Rouhani’s state visits to Italy and France, Sace (Italian Export Credit Agency) and Koface (French Export Credit Agency) have no problem with Iran.
Recently Hermes had some problems which are fortunately in the stage of settlement. IMIDRO cooperated with the buyer of Al-Mahdi Aluminum although it was not within our responsibility. But we mediated for the payment of Al-Mahdi’s debts to Hermes and fortunately the Ministry of Industry, Mine and Trade cooperated and problems of this unit are diminishing.
Meanwhile, after a recent visit to Iran of the South Korean president, follow-up was made and now South Korean companies are constantly cooperating. Also, during the Indian prime minister’s Iran visit, an agreement was signed with Nalco Company and it is expected that an operation team will start negotiations within the next month. Japanese companies which will accompany their prime minister to Iran in August have now started preliminary talks. By the end of current year, a number of the MOUs already mentioned are expected to become operational.

Do you mean there is no obstacle in the way of money transfer?
We hope that the problems will be solved and we will be able to start investments.

In the post-sanctions era what opportunities the steel and mining industries are facing?
In a recent conference we attended in Zurich, out of the 200 investors present there I dare to say Iran was an attractive market for about 120 of them. Because as you know, Iran is an emerging market while the markets of China and Malaysia are no more attractive for investors. Iran enjoys very high potentials as our country is oil/gas rich and has skilled and educated manpower. On the other hand, it has access to open seas and good mines and this will make the world think about making investment in Iran.

Will the world mining giants return to Iran? Have you held talks with them?
Now the world’s prestigious international companies, including Rio Tinto, Trafigura, Glencore, and reputable Chinese and Australian companies are in contact with us. For example Glencore and Trafigura started their activities with copper. Major German companies such as SMS have started negotiations. Recently we have held talks about settlement of financial issues of electrode graphite and other plans and started cooperation with Mubarakeh Steel Plant.
The Australian companies are coming and going and the Koreans, such as POSCO, which is a creditable company have signed a memorandum of understanding with us. Another company under the supervision of POSCO has announced readiness for the construction of Parsian Port. This company is expected to establish a joint company with India’s Nalco which is a big aluminum company for production of aluminum in Iran. In fact many reputable companies have announced readiness for cooperation with Iran and we hope that other creditable companies such as BHP of Australia will announce readiness for cooperation in a near future.

When do you think foreign investment in Iran will become operational?
For the time being Italian companies have stared cooperation with Iran, including their guarantee fund which was mentioned earlier. A contract has been signed with Axen of France. The required preliminaries have been taken for cooperation and signing of contracts with German companies and they are expected to become operational. In the aftermath of the visit of South Korean president to Iran, Korean companies have started their activities for cooperation with Iranian companies.
We should admit that the banking system all over the world is slow, conservative and time consuming. Some of the projects have already begun, for example the titanium project in Kahnuj which is one of the most historical projects abandoned 20 to 25 years ago. The project has been defined but not launched for different reasons. But after JCPOA the joint Iranian foreign contractor companies have announced readiness for cooperation. Some reputable Australian, British and Polish companies have participated in the tender and are competing with each other. This shows that in the field of finance, problems are being gradually settled.

In what stage are the seven-fold steel projects?
Fortunately, the seven-fold steel projects with all their problems are now in the stage of implementation thanks to the efforts of the investors, the Steel Company, contractors, consultants and support of IMIDRO. Currently operations have started for the production of Sepid Dasht 800 thousand ton sponge iron line. If the office of Governor General of Chaharmahal & Bakhtiari in accordance with the responsibility it has accepted to solve the problem of water there, implement the piping operation and provide the required water it will be opened in July. Also it is predicted that by the end of the calendar month of Shahrivar (September) this year sponge iron line of Shadegan Steel Company will be commissioned. Also, it is expected that by the end of the current year two to three other companies out of the seven-fold steel project will become operational. At present construction operations of Neyriz, Sepid Dasht and Shadegan companies have started and problems with the Chinese financier have been removed so that good discounts have been received and problems of the plans have been solved to a great extent in terms of price and quality. It is projected that at least five projects, including all the sponge iron plans will become operational by the end of the current year.

Do you have any further comments?
At a time that the ‘Economy of Resistance’ is the main talk among economists and pundits, mining can be regarded one of the main pivots in this debate. I would like to congratulate the mine workers, industrialists, mining industries and noble workers in this field who through their hard and vulnerable job especially in the area of coal help development of the country. I hope that all together, the private and public sectors, hand in hand and for the dignity of our country can place our country among the 10 top countries in the world.  
Source: Iran International