Iran is among the world’s top 10 countries and the first Middle Eastern country to account for about 7% of the world’s mineral resources. Iran also has a high ranking in its global inventory due to the presence of uranium, coal and iron ore reserves. According to studies, Iran is on the belt of iron, zinc, lead, magnesium, copper and gold, at least 100 years of minerals for production and extraction, but despite all these very rich mineral resources and the potential for economic growth of the country through mines, Iran has not yet been able to extract its mineral resources properly and the share of mineral export in the country’s GDP is very small , In such a way that Iran is extracting 340 mn tons of mineral resources annually from less than 0.6% of its reserves, the standard for extracting of mineral resources in the world is 1% of the total volume of reserves per year.
So far, about 5,400 mines have been discovered in addition to 3,500 sand grains, with 70 types of minerals in the country and the predicted reserves for the active mines are estimated at 60 bn tons, of which about 43 bn tons are definitive. On the other hand, the entire range of mining and exploration covers about 7% of the country’s total area. There are about 5,214 mines in operation in Iran. Iran mines are mostly Open-Pit and ranks amongst the most mineral rich countries of the world and this sector contributes to around 4% to GDP and this figure drops to 0.76% when the mining related industries are removed.
limestone is produced with the highest amount of 133 mn tons in Iran. However, iron ore, copper ore and decorative stone mines have the highest annual production value of mineral products, respectively.
In the year ended March 2016, of the 5,214 mines in operation, 5,056 mines were exploited by the private sector (96.9%) and 158 mines by the public sector (3.1%).
Iron ore is one of the most important and strategic, among the 20 most important countries. Iran has 2,800 mn tons of iron ore reserves and most of the country’s iron ore mines are located in Yazd, Kerman, Markazi and Khorasan provinces. Iran accounts for 1.59% of the world’s total iron ore reserves, ranked 10th in the world’s largest reserves. The most important iron ore mines are Gol Gohar, Sangan, Choghart, Se Chahun, Chador Malu, Zarand and Chah Gaz. The country’s iron ore deposit is estimated at 5,200 mn tons, which can be distinguished according to geographical areas:
The estimated amount of Iranian iron ore proven reserves is estimated at 2,800 mn tons, which can be distinguished according to geographic regions.
The amount of iron ore production in the year ended March 2017 was 31.7 mn tons, up 4.19% from the previous year. In 2016, Iran produced 1.61% of the world’s total iron ore and was ranked 10th in the world.
By 2016, Iran had the world’s 11th largest iron ore producer with 36 mn tons’ production. In 2016, a 2.3% reduction in iron ore production took place in the world, while iron ore production in 2016 has increased by 33.3% since 2015.
In the year ended March 2017, iron ore export amounted to 775 mn USD and 20,235 tons. As a result, export grew 48% from the same period of last year. Most of the iron ore export have been concentrates (hematite).
The main destination of iron ore export was China, which accounted for the largest share of iron ore export with 98.3%.
Iran is the 3rd largest producer of decorative stones in the world with 4 bn tons of mineral deposits and the largest variety of decorative stones in the world. Currently, there are about 1,900 decorative stones mines and the production nominal capacity in this sector is 27 mn tons. In the processing of decorative stones, there are about 6,500 units with the production nominal capacity of 160 mn sq m. The value of the chain in the domain of decorative stones is based on the installed capacity of more than 7 bn USD. Unfortunately, for many reasons, the huge investments made in this area do not return well.
The production of decorative stones has decreased in recent years, from 15.3 mn tons in the year ended March 2014 to 10.7 mn tons in the year ended March 2016.
Considering the special position of Iran in terms of possessing valuable resources and unique qualities of various types of decorative stones, the major world stone markets, such as China, India, Italy and etc. have always been Iran’s business partners in this regard. In the year ended March 2017, unprocessed (raw) decorative stones export rose to 143 mn USD and weighed 726,000 tons, which is 42.5 times higher than in the year ended March 2016. The export of decorative stones in the year ended March 2017, reached 122 mn USD and 374,000 tons, which is 41% higher than in the same period last year. Due to the prevalence of traditional thought against modern technology, the productivity of the decorative stones industry is low, so that an average of about one ton of roughly 7 sq m is currently produced.
The most important factors affecting the low share of the country’s export are:
1- The presence of strong rivals such as India and China (focusing on the supply of stones at a more competitive price has dominated the market).
2- Lack of modern and up-to-date technology of the world, which will have a significant impact on the level of quality expected by customers.
3-The weakness of the liquidity of manufacturing and exporting firms and consequently, the failure of firms in technological investment.
4- The traditional management of stone processing units.
The main destination for the export of raw decorative stones was China, which accounted for the largest share of export with 85.3%.
Iraq and Turkmenistan are the main destination for the export of processed decorative stones.
Iran’s bauxite deposits are geographically dispersed in the northeast, north, northwest, center and southwest. Bauxite deposits in Iran are not much and given the conditions for the formation of bauxite and considering the geological problems of Iran, no significant reserves of global significance will be discovered. Iran’s bauxite reserves are about 39 mn tons, accounting for almost 0.1% of the total world bauxite reserves. In the year ended March 2016, the number of bauxite mines in operation in Iran has been 7 mines, of which 840,000 tons of bauxite is produced.
In the year ended March 2017, alumina production was 235,200 tons, which fell by 3.6% compared to the previous year.
Iran’s coal reserves are estimated to be 1.16 bn tons, of which about 412 mn tons (about 28%) are coal coke and the rest is thermal coal. The main reason for the exploration of coal in Iran is the Isfahan Steel Co. and the supply of coke required by the furnace. Due to the type of Iranian geology and the low depth of the coal bed, other uses for exploration and extraction of coal are not considered. In the year ended March 2017, the total production of coal concentrates is 1,232,000 tons, rising to 10.6%.
Iran’s coal export have been decreasing in recent years. In the year ended March 2017, Iran’s coal export increased 26.7% in value and 18.27%, in weight, to 6.9 mn USD and 215,500 tons, respectively. Major export destination of coal are Turkey and China.
Coal import in the year ended March 2017 with a 25% decrease in weight and a 12.4% decrease in the value from the previous year was 290,000 tons and 48.57 mn USD.
The copper proven reserves in Iran are estimated at around 2 bn tons. Considering the grade of copper content, the copper content is estimated to be around 18 mn tons, which accounts for about 4% of the world’s copper reserves on a global scale. The country’s copper mines currently have 39 mines, according to the latest report in the year ended March 2016, 36 mines were in operation. The total production of copper mines in operation in the year ended March 2016 amounted to 6.98 mn tons, which has nearly tripled since last year.
Zinc & lead mines
At present, more than 9% of the world’s lead and zinc reserves have been detected in Iran, but the amount of production and export do not even account for world 1% proportion.
Anguran of Zanjan, Nakhlak of Isfahan and Mehdi Abad of Yazd, Kouch of Bafgh and Ahangaran of Malayer are of the most important lead and zinc mines. Except for 2 mines, the remaining are exploited by the private and cooperative sector. Lead and zinc mines in Iran are government-owned and land exploitation and the scale is put on tender annually.
The Iranian gold reserves are located in 10 zones. In the production of jewelry, Iran’s share reaches 1% of the world market. Of course, the status of gold mines in Iran is significant too. The country’s gold reserves are estimated at 450 tons, which may increase to 1,000 tons and ranks 46th in the world. Currently, 21 provinces have gold reserves and gold reserves in 12 provinces are desirable. According to global reports in 2016, the amount of gold production in Iran was 11 tons, which holds the world 39th place.
Sanctions & Post-sanctions
During the sanctions, as well as in other parts of the economy, the mining industry suffered from a number of problems, such as lower investment rate, lack of modern machinery and equipment and eventually bank sanctions in selling products and purchasing equipment. During these years, the share of Iran’s participation with European and American countries declined, excluding Chinese market. With the nuclear deal and the lifting of the sanctions, Iran’s platform developed and foreign investors were willing to participate in some parts. One of the areas that was welcomed by foreign investors was mining and mineral industries. Accordingly, Germany, Spain, Australia, Canada, Belgium, Britain and other developed countries offered their cooperation proposals to Iran Mining Development and Renovation Organization. Iron ore, copper and coal are among the areas in which investors tend to take part. After JCPOA, a memorandum of understanding for cooperation with foreign parties in the mining sector was signed; some of them are as follows:
-CNRS company agreement with Geological Survey & Mineral Explorations of Iran for the development of geological knowledge and related Studies.
-Memorandum of understanding of BRGM Company with Geological Survey & Mineral Explorations of Iran for the transfer of knowledge of the exploration of rare earth elements.
- Huge reserves of minerals (there are about 43 bn tons of proven reserves and more than 60 bn tons of proven and probable reserves)
- Variety of minerals (About 68 types of minerals were found and in diversity, Iran is among the top 10 mining countries in the world)
- Existence of potential capability for exploration, processing and production in mining industries
- Institutionalization in the field of development organization and covering the risks of mining activities (insurance fund of investment in mining activities)
- Insufficient attention to the preparation and updating of basic geological, geochemical and mineralogy potential data
- The lack of geological and mineral intelligence databases in accordance with international standards
- Insufficient attention to optimal management of minerals production from reserves and resources
- Weakness in attracting foreign investors
- The small scale of mineral industries in comparison with similar units in the world
- The development of non-sustainable development of mining downstream industries, especially in basic metals
- Exporting unprocessed minerals
- Extensive communication and agreements with many Asian, European, South American and African countries in the field of geology, exploration and creation of a geoscience database
- The need of many developing countries to geological knowledge and mineral exploration of Iran
- The availability of low-level trained staff relatively cheap-
access to energy resources
- Article 44 of Constitution as the provider of the Appropriate development Framework in Mining and Mineral Industries
- Access to the gas transmission network
- Access to national railway lines
- High price volatility of raw materials
- The absence of large private holding companies in the mining industry as a cover and guarantee for financing
- The use of unilateral restrictions on natural resources organizations, environmental protection and cultural
heritage in mining activities
- Inadequate advanced technologies due to sanctions
- Difficult access to world markets due to Iran’s lack of
membership in the WTO
- Iran is one of the least costly countries for mining and mineral industries, due to its affordable and high energy prices, low loyalty rates, low labor costs and other benefits such access to international waterways, railways, electricity network and proper tariffs for transportation system.
- Revenues from mining activities from the date of exploitation or extraction or activity in developed areas for five years and in less developed regions for ten years are exempted from tax.
- Cession of land on a time base in the special zones
- Cession of mine royalty and extraction right as well as abandoning mine extraction of the mine
- Insurance coverage advantage in mine exploration, exploitation and mineral processing
- Advantage of laboratory services in Karaj Center and/or advantage of personnel training in the project startup
- Infrastructure (energy and water) assistance in provision
- Guarantee for feed with especial conditions and/or guaranteed purchase of product
- Provide support for utilizing National Development Fund facilities and /or support the projects to receive foreign and domestic facilities
- Reserve Sharing Contract after exploration
- Exploration Risk Insurance by government
- Investment priorities
- Exploration of copper and poly metallic
- Exploration of phosphate
- Exploration of nickel
- Exploration of raw material of aluminum with priority of bauxite
- Exploration of iron ore
- Further exploration to identify gemstones and semi-precious stones
- Exploitation and extraction of mechanized coal mining
- Exploitation of brines for the extraction of potassium and magnesium
Laws & Regulations
All natural and legal persons extracting iron ore, which are licensed under the name of the Organization for the Development and Renovation of Mining and Mineral Industries (IMIDRO) and its subsidiaries but do not have a contract with the said organization and subsidiaries are obligated for mines royalty to pay 20% of the total sales to the general income account of the Treasury.
-In the case of investments for the completion of the production chain, the royalty will be paid step by step as follows:
– The product is to be sold as raw and granulated iron ore equivalent to 20% of sales
– The sales of the product as concentrate including pelletizing within the company and selling outside of the company equivalent to 16.5% of the sales
-The sale of the product as pelletizes equivalent to 13% concentrate sales revenue
– The product sold as sponge iron equivalent to 10% of concentrate sales revenue
The above mentioned applies solely to companies that provide the value chain (processing) within inside the company. In the event that the companies involved in this component comply with the trade law from the point of their profit, investing in mines and minerals downstream, of 10% of the investment made from profit is considered as royalty.
Mining industry in Capital Market
Mining companies are categorized in the metallic mining extraction Group at Tehran Stock Exchange. The companies in this group, with a market value of 6,412 mn USD, have a share of 6.2% of the total value of the Iranian stock market. The average P/E ratio of the metallic mining extraction Group is 6.84.