Iran: Mineral Resources and Opportunities

Tom Butcher, Consultant

A Bit of Background

Iran has lived with sanctions for many years now.  And still does. The first hefty set of sanctions was unilaterally imposed upon the country by the US following the takeover of its embassy in Tehran in November 1979. These sanctions froze assets and affected, amongst other things, investment in gas, oil and petrochemicals, together with banking and insurance transactions, and shipping.

The next set of sanctions to hit the country followed the discovery by the International Atomic Energy Agency (IAEA) that, in September 2005, Iran was not in compliance with its international nuclear obligations. This time around, sanctions were imposed not only by the US, but also by both the EU and the UN. UN sanctions, under Security Council Resolutions 1737, 1747, 1803 and 1929, were imposed successively in 2006, 2007, 2008 and 2010. These hit the country particularly hard (especially those of 2010), affecting, not least, the development of the mining sector in Iran.

Today

To the surprise, perhaps, of many, in July last year the world powers and Iran struck a deal at the UN in Vienna over the country’s nuclear programme which would, potentially, lead to the country’s economy being reopened to both investment and global trade. Sanctions relief would become effective on verification by the IAEA of implementation by Iran of the nuclear measures agreed upon.

On January 16 this year, “Implementation Day”, the IAEA certified that Iran had indeed fulfilled its initial obligations under the agreement. Subsequently, the UN (nuclear-related) sanctions were unwound, as were a number of others imposed upon the country.

Whilst some US-imposed (non-nuclear-related) sanctions still remain in place, as far as non-US companies are concerned, it should now be “business as normal” with Iran – as long as their dealings involve neither US persons nor banks. Such business can, now, include both the finance of mining projects and ownership of Iranian mines, together with exploration and extraction.

Mineral Resources and Opportunities

If the country’s PressTV is to be believed, Iran’s mining sector is one “which boasts some of the world’s most stupendous riches but remains vastly underdeveloped.”  Although not, perhaps, “stupendous”, these riches are pretty impressive, including, depending upon whom you ask, some 68 different types of mineral worth US$700 billion.

“Major” Metals

In addition to significant deposits of iron ore in Kerman, Khorasan and Yazd, amongst the non-ferrous metals, the country produces and has significant major deposits of copper (in Sar-Cheshmeh, Sungun and Miduk), and zinc and lead (both in Mehdiabad). According to the United State Geological Survey (USGS), the country’s zinc, copper and iron ore reserves are some of the largest in the world.

The country also produces aluminium, gold, manganese and uranium, of which last it reportedly has the world’s tenth largest reserves.

Selected Iranian Metal/Mine Production – 2009-2013 (‘000 Tonnes)

Minor Metals

As well as base and other metals, the Iran mining industry has also produced, and still does produce, a number of minor metals.

Selected Iranian Minor Metal/Mine Production – 2009-2013 (‘000 Tonnes)

Although this has not been possible to confirm, I did hear that some rather low-grade APR, sourced from Iran, was being sold out of Dubai. Whether this is true, I know not. Or, if it is, whether such APR is still being sold out of Dubai.

In addition to the metals above, in the recent past, the country has also produced white arsenic (in the form of orpiment and realgar concentrates), with the BGS listing estimated production in 2008 of some 100 tonnes, but none thereafter.

Whilst information is currently somewhat hard to come by, the country also appears keen to exploit several more of its minor metals’ resources.

Future plans for minor metal production include one for a huge  titanium mine in Fanuj, in Sistan-Baluchistan Province, in the southeast of the country (down near its border with eastern Pakistan), which will require an investment of US$4.2 billion over the next five years to bring into operation. Some 80 mines containing copper, iron ore and titanium have been “explored” in the Fanuj area in the last five years. With reserves estimated at some 3.6 billion tonnes, Fanuj is said to include “a cluster of 30 deposits, each capable of yielding one million tons of titanium ore per year.”

Other significant titanium reserves in the country are situated in Kahnuj in Kerman Province (400 million tonnes), in southeast Iran, and near Orumieh (200 million tonnes), in West Azerbaijan in the northwest of the country.

Over the past several years (since July 2014), REEs, and particularly heavy REEs, have been a focus of attention for the state-owned Iranian Mines and Mining Industries Development and Renovation Organization (IMIDRO).  IMIDRO has actively been looking at sourcing these from iron and phosphate ore and tailings, not least as “with their simultaneous extraction more value added can be created.” And, indeed, “IMIDRO calls for cooperation of all investors and owners of technology in the field of development of rare earth elements and strategic metals and will provide proper conditions for activities in this regard.”

The country’s ambitions are not, however, confined just to REEs and titanium. Other mining projects involving minor metals include a magnesium oxide production plant and a proposed antimony (considered by IMIDRO a “strategic” metal) mine at Sefidabeh in South Khorasan province in eastern Iran near Afghanistan.

Opportunities

Even before signature of the international deal in July last year, IMIDRO had organized a major mining conference in Tehran at the end of May/beginning of June entitled the Iran Mines and Mining  Industries Summit (IMIS 2015).  Over 200 mineral projects “ready for investment” were presented and the event drew in excess of 200 domestic companies.  Foreign companies from over 20  countries  registered to attend including ones from Canada, China, Finland, Germany, India, Japan and Sweden.

Since signature, at least a dozen European trade delegations have visited Iran, a figure that is bound, now, to increase following “Implementation Day”.  (The number of individual news items  detailing such visits on the website of Ministry of Industry, Mine and Trade attests to their frequency.)

No one believes that the lifting of sanctions will have an immediate effect on Iran’s mining sector.  Indeed, a timeframe of three to five years, although possible, may even be optimistic.   But, in the absence of sanctions, and as a purely practical matter, one immediate effect will be that mining equipment, together with mineral and mining technologies can, now, be exported to the country with considerably more ease.

According to Bloomberg, Mojtaba Khosrowtaj, First Deputy  Minister in charge of trade at the Ministry of Industry, Mine and Trade, when he was interviewed back in November last year, said that, assuming an oil price of US$40 a barrel and daily exports of two million barrels, mining and metals such as copper and lead, and “higher priced rare earth elements” could be worth “much more” than the country’s revenue of US$30 billion from the oil industry. Oil prices are now hovering around 25% less than this figure of US$40 a barrel

Whatever they may be worth precisely, the opportunities are by no measure insignificant, and probably range anywhere from US$20 billion to US$29 billion.  Maybe even more.  How many of these involve minor metals is not entirely clear.  But what is clear is that some of world largest mining companies, for example Rio Tinto, have already started to scope out what these opportunities may mean for them.  One can rest assured, however, that their numbers are only likely to get larger.