With the fall in oil prices, Iran’s focus has drifted to non-oil sectors and the government is aiming to increase the mining sector’s current GDP share from less than 1 per cent to more than 2 per cent within next ten years, a report said.

The Islamic Republic is also targeting growth in relevant downstream industries from 5 per cent to 20 per cent, added the report titled "Iran Drifts to Non-Oil Based Sectors, Mining Sector to get Impetus” from Frost & Sullivan, a growth partnership company.

This requires mining and relevant industries to grow at 10-12 per cent per annum, the report noted.

“The boom in the mining sector will help the Iranian Government reduce the unemployment rate and raise non-oil revenues significantly,” said Ali Mirmohammad, senior consultant and business development manager - Iran, Frost & Sullivan.

“The Iran 2025 Outlook initiative calls for greater domestic value-adding activities with the aim to reduce the amount of raw minerals exported from the country. This programme is expected to require significant imported technology and participation of foreign partners.”

In the post-sanction era, the country has charted a strategic 10-year plan to boost mining exports to $6 billion from $1.5 billion in 2015. These mainly include new reserves of raw materials whose processing in-country is not feasible. Furthermore, all manufacturing exports (excluding petrochemical products) are expected to increase from $15 billion to $60 billion by the end of 2025, if all barriers are lifted.

Iran intends to attract over $20 billion of foreign investment in mining and downstream industries once the sanctions are lifted, said the deputy minister and chairman of the Executive Board of Iranian Mines & Mining Industries Development & Renovation (IMIDRO), Mehdi Karbasian at the International Mining And Resources Conference (IMARC) Australia.

IMIDRO is the state-owned holding mining company that governs and allocates budgets, makes policies and owns the largest strategic mining companies in Iran.

IMIDRO has welcomed foreign investors and technology providers to complete over $29 billion investment projects, $9 billion of which currently are under implementation. IMIDRO is strongly looking for new explorations up to nearly 300,000 sq km to supply required materials for downstream projects, said Salman Nasr, the International Relations officer of IMIDRO.

Exploration of new reserves in copper and poly-metals, phosphate, nickel, raw material for aluminium production, iron ore and precious and semi-precious stones are key investment priorities in the country.

“To encourage foreign investments, IMIDRO has set up initiatives such as providing right of exploitation of mines up to 25 years and some incentives like tax exemptions. Establishing more free investment zones is another policy, which is followed by IMIDRO,” Mirmohammad noted.

Moreover, a mining Special Economic Zone is under construction to serve the metals and minerals industries. Two million tonnes of aluminium, 10 million tonnes of crude steel, one million tonnes of magnesium, and 1.6 million tonnes of alumina are the major investment opportunities in this economic zone.

New investments in graphite electrodes, titanium slag and ilmenite concentrate, calcined petroleum coke, coal washing, aluminium alloy ingots, alumina from bauxite, iron-ore concentrate and pellet, alloy steel, hot-rolled steel and cold plate, magnesium lithium alloy, and coal powder are some key mid-stream opportunities in Iran.

Besides the above investment opportunities, the Government is also keen on partnership of the private sector with foreign companies for cost reduction strategies for iron-ore exploitation, renovating obsolete technologies and increasing safety levels, optimising train loading and unloading operations as well as engineering and consultancy in exploration and exploitation of newly discovered reserves. Privatisation and developing mining industries in less developed regions across the country is another key policy in the 6th Development Plan.

Homa Gousheh, chairwoman of the Association of Banking & Credit Investment Consultants, said: “Project financing is a key constraint in Iran which has currently halted many proposed investments, especially in metals and minerals sector in the country. To boost investments, fuelling foreign resources into the country is vital.

"Iran supports foreign investment against expropriation or nationalisation under the Foreign Investment Promotion and Protection Act (FIPPA) and also allows investors to transfer the principal and interests of foreign capital or any portion of the capital remaining in the country abroad post deduction of taxes, duties, and legal reserves.”

While sanctions still not lifted, Iran has received huge interest on its mining projects from 16 mining companies across the globe like Rio Tinto and BHP Billiton. Despite instabilities in the business environment due to the current political and economic situation, Iran remains a lucrative market – not just because of its vast hydrocarbon resource base, but also because of its desire to become the region’s top technological and economic power house.

Iran’s mining industry value chain requires new investments of approximately $60 billion, the report said.

To strengthen its strategic position in the region, Iran needs to diversify the economy from oil and gas and enhance economic growth as well as sustainable development through alternate resources like mineral reserves. Empowering downstream industries to reduce the amount of raw material export is a key success factor that can boost the non-oil based economy in the country. – TradeArabia News Service