According to the global statistics, Iran is one of the top 10 countries in the world and the first country in the Middle East with having mineral resources. Moreover, 7% of world’s mineral reserves located in Iran. Despite these potentials, Iran has failed to utilize them for economic growth in the past years. According to investigations, about 6 thousand mines have been identified with more than 60 types of minerals and there are 15 thousands of mineral areas with proven reserves of 40 bn tones worth more than 770 bn USD. Iran has 12 important world mines.
Iran is on top of the global list due to Uranium, Coal and Iron ore reserves and according to the forecasts and analysis it is on the belt of Iron, Zinc, lead, Marble, Copper and Gold mines. Despite the rich mineral resources, minerals export share is very low in GDP.
Iran mines scattering status
Table 25-1 Statistics of selected mineral production
Following table shows Iran’s rank and share of the minerals production and reserves in 2015. Due to this fact, Iran has highest share of gypsum production in the world in comparison to other minerals and its share reached from 6.15% in 2014 to 8.53% in 2015. Iran as well is as the world’s second large gypsum producer.
Table 2 Iran’s share and ranking in mineral production & reserves in the world
Export & Import
The volume and value of export declined in the mining industry during the recent years.
Table 3 Export of mining industry
Figure 25-1 Trend of minerals export value (mn USD)
Mineral products and mine industries have a significant role in non- oil export. It shows the importance of mining chain in economy and export- oriented of this section. In the year ended in March 2016 foreign trade value of this section reached to 11.4 bn USD that the minerals and mining industry export passed 7 bn USD and allocated the share of 16.5% of the total export. Indeed minerals import value reached to about 4.4 bn USD, which accounted about 11% of total import value to this section. Respectively Iraq, China and India were of Iran minerals ten- target markets in the year ended in March 2016 among which, Iraq had 18% share, China with 15% and India with 14% share. On the other hand, in import, among 10 countries, China is in the first place with a share of 33%, UAE located in second place with 19% and South Korea in third place with a share of about 14%.
Table 4 Foreign trade of mining and mineral industry
Ownership of mines
According to the Statistical Center of Iran, mines ownership include 97% by private sector and 3% by public sector.
Due to the latest studies, the proven and potential reserves of Iron ore in Iran has been estimated around 2,585 mn tones and 4,522 mn tones respectively.
Table 5 The Iron ore reserves (mn tons) Mine
During the year ended in March 2016, about 42. 5 mn tons of Iron ore produced in Iran; it is predicted that reaches to 48 mn tons for the year ended in March 2017, which will have 13% growth. Iron ore capacity is predicted 52 mn tons for the year ended in March 2017.
Table 6 The increased capacity and the country’s Iron ore production (000 tons)
Figure 25-2 Increased capacity and Iran’s Iron ore production (000 tons)
Chadormalu and Gol Gohar mining and industrial companies are the largest Iron ore producers of Iran so that over 60% of Iron ore produced by these companies.
Table 7 Total Iron ore production in the year ended in March 2016
According to the statistics, Iran is in the 11th rank by producing 33 mn tons of Iron ore during 2014 – 15.
Table 8 Statistics of Iron ore Production (mn tons)
Iron ore export
During April- January of 2016, Iron ore export amounted 15.576 mn tons with 584 mn USD value.
Table 9 Iron ore export
Figure 3 Iran Iron ore export (mns USD)
China is the main destination of Iran’s Iron ore export so that 97.9% of Iran’s Iron ore export was to China during April- January of 2016.
Table 10 Iron ore export value by destinations in April 2016 – January 2017
Based on studies, the production capacity of Steel has been predicted about 55 mn tons per year in the vision in 2025. To supply Iron ore and achieve this program, it is necessary to define new development projects and increasing Iron ore production capacity up to 88 mn tons. Of this amount, 77 mn tons of Iron ore concentrate (after conversion to pellets) and 11 mn tons of granulated Iron ore is required. In addition it should be planned to extract about 154 mn tons of crude Iron ore.
Long been Iran considered as one of the important potentials of porphyry Copper deposits in the world and it is located at the best condition of metallurgy in Copper speciation. About 5% of global Copper reserves are in Iran. Total Copper reserves produced by 34 mines that have been scattered about 14 mines in Kerman, five mines in Zanjan, four mines in East Azarbaijan and three mines in each of the cities of Qazvin, Semnan, Khorasan, Yazd, Qom, markazi, Sistan and Baluchestan and Tehran, that only 17 mines are active and the rest are inactive. In fact, half of the Copper mines are inactive.
Three mines of Sarcheshmeh, Sungun and Meiduk are the biggest Copper mines in Iran, which their total reserves reach to 3.4 bn tons and their Copper ore contains on average 0.6% Copper. Sarcheshmeh Copper mine is located in Kerman province the world’s second large Copper deposit. This mine has more than 826 mn tons of proven reserves and 1.2 bn tons of potential reserves of Copper and the average of Copper ore grade of 0.7%. In addition, there are Molybdenum, Gold, Silver and rare etc.
Sungun mine is the second large active Copper mine with 470 mn tons of proven reserves and 1 bn tons probable reserves at a grade of 0.6%. The third major Copper mine in Iran is Meiduk- an open pit mine – with 170 mn tons of proven reserves and 0.25% grade.
National Iranian Copper Industries Company with set up of two
concentrates factories in the Sarcheshmeh and Sungun added about 300,000 tons of annual production of concentrate capacity in 2015.
Note:The complete report of Copper mentioned in metals section of this book
The systematic exploration on Coal resources started in order to supply the requirements of Isfahan Steel factory and Coal provision forecast for the development phases of this factory in Iran since the year ended in March 1967. Results indicate that coal- rich areas of Iran, were about 100,000 sq km areas with reserves of 2 bn tons of coke Coal and thermal Coal of about 3 bn tons. According to the discoveries, the most significant Coal reserves are in Northern and Central areas of Iran, Kerman, Tabas, Central Alborz, Eastern Alborz and Western Alborz mountains. Most reserves placed in Tabas areas (exploratory reserve 75%) and then Alborz (exploratory reserve 16%) and Kerman (exploratory reserve 9%). About 1.470 mn tons of concentrates Coal produced in the year ended in March 2016 and it is expected to be 1.5 mn tons per year. Coal capacity is about 2.7 mn tons for this year (the year ended in March 2017).
Table 11 Trend of Iran Coal capacity & production (000 tons)
Figure 4 Trend of Iran Coal production capacity (000 tons)
Coal industry challenges
– Iran’s Mines are in such a way that make the Coal mining operations costly and low efficient, even assuming technology to be updated in this industry, since the coalmines structure in Iran are non- economic. Accordingly provide the necessary infrastructure in these mines can be useful.
– Depreciation of mining machinery and equipment leads to reduction in production volumes and poor quality.
– Lack of expert human resources (labor) to work in coalmines has caused the workforce to be preserved. As a result, aging will reduce the efficiency of the labor force.
– Damaging effects on the environment and the unfavorable situation of the safety are the other problems of the coal- mining sectors, which involved life and health risks.
– Lack of domestic competition and monopoly market leads to
coal price variance rather than the competitive price.
– Coal mining mechanization equipment is very expensive and it is impossible for weak mines to import them in Iran and without the state supports, it will be impossible.
Lead and Zinc mines
8% of Zinc and 3% of Lead of the world reserves are located in Iran. 600mines have been recorded for Iran that the proven reserves are about 65mn tons and its probable reserves are about 170 mn tons. Anguran mine is the most important Zinc mine in Iran, which has the highest grade and it is one of the most desirable mines in the Middle East. The second large active mine is Irankadeh mine, and the third one is Bafgh mine, which is considered as one of the oldest Lead and Zinc mine in Iran.
Table 12 Proven reserves, probable reserves, grade of active Lead and Zinc mines of Iran
Iran’s Gold reserves have been placed on 10 zones. Iran’s Gold mines status is remarkable. Gold mine reserves is estimated about 450 tons that this number may be increased to 1,000 tons. Iran has 46th rank in the world. Nowadays 21 provinces have Gold reserves and there are desirable Gold reserves in 12 provinces in Iran. There are about 15 Gold mines in Iran, of which 12 are active mines and 3 mines are inactive. Generally, it is detected more than 50 regional and local Gold mines in Iran, which there are only 10 regions, having good reserves among them. The world’s average annual Gold production is about 3,000 tons. Annually about 2.5 tons of Gold is extracted in Iran; it is expected that total Gold production of Iran reaches to more than 5.5 tons in the future with setting one of the largest plant; which add three tones to Gold
production. Investment in the Gold mines of Iran Simultaneous with the growth of world prices for Gold shows a growing trend in the past few years, but the industry is not as it should be. Moreover, Iran’s production share and global export is minimal.
The Gold extraction rate, as well as the actual production of Gold has been rising during the years ended March 2010- 2014. According to the forecast, Iran’s Gold production will be reached to around 7 tons per year until the year ended in March 2018. Of this volume, 6 tons are related to the increased capacity and optimized production of Zarshuran Gold company, 700 kg are related to the Gold mining exploitation in East Azarbaijan and 200 to 300 kg of Arghash Nishapur plants will be added to these figures.
Table 13 Extraction rate and Gold production in Iran
Iran’s active Gold mines are introduced bellow. It is visible Zarshuran Gold mine reached to the most production capacity among the other mines.
Table 14 Iran Active mining review
Analyzing the known ore deposits in Iran, the results included 74 reserves and the available major resources related to the available reserves in the following Table
Table 15 Iran’s possible known Gold reserves
Table 16 Export status of raw decorative and processed stones
Figure 5 Export value of raw decorative and processed stones (mn USD)
Iran’s reserves of decorative stones including Granite, Marmarite, Travertine and Marble of various colors and quality are in first place in the world. However, Iran’s decorative stones are in the fourth place based on the global ranking reserves. More than 1300 building stones mine are widely distributed in the whole country. 25% of mines are dedicated to decorative stones in Iran.
Proven reserves share of travertine stone, Marble, Marmarite, Quartz, and Granite are10, 1, 54, 15 and 20% in Iran. Marmarite, granite and quartz has the highest share respectively and totally make 89% of the decorative stones.
It should be noted that according to the latest estimations, decorative stones make 6.3% of Iran’s total mineral reserves among which shares of Marmarite, Granite, Porcelain, Travertine, and Marble, are respectively, 3.4, 1.3, 0.9, 0.6 and 0.04.
Stone industry efficiency is low in Iran so that, of a ton of raw ore it is produced an average of about 7 sq. m stone in Iran already. Power consumption of stone factories is approximately 6 kW for each square meter of stone production that it shows extremely low efficiency. The most important influencing factors on the low share of export of stones include:
1. Competitors like China and India (focusing stone supply with more competitive prices, amounted maximum of market)
2. Lack of modern and up to date technology, which will have a great impact on customer’s expected quality.
3. Weak liquidity of manufacturing and export enterprises and consequently the inability in technological investment. (TPO)
Processed stone export reached to 103mn USD and 317,000 tons in April- Jan 2017 that increased in 47.4% by value and 52% by weight in comparison to the same period last year. Also in this period, raw decorative stone export amounted to 115mn USD and the volume of 580,000 tons, which increased in 41% by value and 42% by volume.
Silica and Glass
There are about 80 active and semi- active Silica mines in Iran. Products are mainly used in Glass making and production of casting sand industries. Most of Silica mines located in the province of Qazvin.
Iran has low to high Silica grade but Low- grade Silica is produced in Iran and high- grade Silica is imported. Although with significant Silica mines in Iran, processing units excepting tow units in Qazvin, does not exist.
Since the type of Silica mines in Iran, cost for processing these materials is more than European countries. Silica production is exported to countries such as China and India, on the other hand, some high quality Silica is imported for Glass making industry from European countries. Poor- quality Silica is used in construction industry as well as sand casting. Due to the considerable usage of this product, investing in Silica mines has high return. Active Silica reserves volume is estimated more than 70 mn tons in Iran.
Table 25-17 Glass production (000 tons)
Table 18 Glass & its products import & export (mn USD)
Figure 25-6 Glass & its products import & export in Iran(mn USD)
Mining industry profitability ratios
Mining companies’ average profit margin is over 29%.
Table 19 Mining industry profitability ratios (%)
– Adoption of restrictive laws and lack of stable law (exchange rates, tariffs, state rights, etc.)
– Low pricing of domestic Iron ore to provide factories Steel feed
– Lack of on time development projects financing
– Lack of providing appropriate infrastructures such as water, electric, gas and public transportation
– Financial issues: lack of working capital and liquidity that is mainly due to payment delay of major buyers (Steel companies).
– Problems with procuring necessary spare parts and equipment:
S W O T
– Richness and diversity of mineral reserves
– Adequate and inexpensive energy
– Access seas
– Weakness in mining industry’s research and development
– The exploit and extract phase weaknesses especially in processing and production efficiency
– Lack of educated HR
– Low technologies
– Lack of appropriate laws to protect and ensure the investment security
– Despite having primary sources for production, competitive products in global markets cannot be provided, because of the high price and low quality
– Having Comparative and competitive advantage in the region in the production of mining and mineral industry.
– Market demand growth in the mining sector with lifting sanctions
– selling and exporting in form of raw materials in mining industry
– Growth of import in mineral products with lifting sanctions
Vision in 2025
Quantitative targets of mining and mineral industries in the vision 2025 are as follow:
– 55 mn tons of Steel production capacity: Production capacity of raw Steel reaches to 55 mn tons based on a comprehensive plan of Steel and strategy of development during the next 9 years. Steel production per capita will reach to 951 tons in factories in 2025. Moreover, it is invested to 700 USD for each tons of Steel production capacity.
– Production capacity of 440,000 tons of Copper: Copper cathode production capacity will reach to 440,000 tons per year in the vision in 2025. Investment value for capacity of per ton of Copper in the complete chain reaches to 5000 USD. The whole chain of Copper production includes concentrate, anode and cathode Copper.
– 5.1 mn tons of Aluminum production capacity: Aluminum ingot production capacity, rise to 5.1 mn tons in the vision in 2025. An investment of 3,000 to 4,000 USD for each ton of Aluminum is made to achieve this objective. This figure also includes the complete production chain (Bauxite mining, alumina production and Aluminum ingots production).
Law and regulations
Based on recent statistics, legal and individual entities extracting Iron ore, which have obtained operating license from IMIDRO and subsidiaries but do not have contracts with these organizations and their subsidiaries ought to pay 20% of sales volume to the state. In case of investment to complete production chain, state rights are paid as follow:
Products that sales as raw Iron ore equals to 20% of sales volume.
Products that sales as concentrate equals to 16.5% of sales volume.
Products that sales in form of pellets equals to 13% sales volume.
Products that sales as sponge Iron equal to 10% sales volume.
Mentioned items belong to the companies that have value chain (processing) inside. Companies that invest in downstream, 10% of invested value calculated as state right.
– 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 Mag nesium
Mining industry in capital market
Share of active companies in the mining industry are traded in metal ore extraction group in Stock Exchange. The table below shows market value of the most important companies of metal ore. This industry market value is over 5736 mn USD and equal to 4.90% of total value of Iran’s stock market. P/E ratio is 8.16.
Figure 7 Trend of mining industry index