Mining News -This is according to BMI Research, which states that foreign investors are already steering clear of the country’s mining and metals industry, owing to inefficient bureaucracy, inadequate infrastructure and corruption.
The sector is also consolidated and consists primarily of domestic and state-owned miners, which will continue to limit new miners from entering the market, Mining Weekly reported.
However, European and Asian investors have shown interest in mining projects in Iran, but BMI notes that if more signatories follow in US President Donald Trump’s footsteps and withdraw from the Joint Comprehensive Plan of Action, the country’s economic growth will suffer, resulting in less domestic demand for metals and ores.
JCPOA is the formal name of the Iran nuclear deal.
Domestic construction and infrastructure developments are a key driver of demand for iron ore and industrial metals.
BMI is forecasting short-term growth of 5-6% for Iran’s mining industry.
Trump announced on May 8 that the US will withdraw from the plan and that it will discontinue waivers for sanctions on the country. The first batch of sanctions, targeting the automotive industry among others, is scheduled to be reimposed in August, followed by a second batch, which includes the oil sector, in November.
Italian steel manufacturer Danieli has halted work on finding financial coverage for orders worth €1.5 billion ($1.8 billion) it won in Iran, following the US withdrawal from the deal.
“With the withdrawal of the US from the treaty, the banks are no longer ready to fund Iranian projects for fear of secondary sanctions,” Danieli CEO Alessandro Trivillin told Reuters on Thursday.
In 2016 Danieli signed a framework commercial agreement with Iran worth about $5.7 billion.
The group set up a steel machinery production plant in Eshtehard Industrial Park in Alborz Province back in May 2017 through a €40 million investment made entirely by the Italian firm.
Finnish mining technology company Outotec expects order intake from Iran to slow, the company’s finance chief said on Thursday.
Outotec, which builds plants, makes equipment and offers services for the metal and mineral processing industries, has a long history in Iran and remained in the market after the US instituted sanctions against Tehran in 2010.
CFO Jari Algars told Reuters by email that if project financing was not available, future orders would decline.
“Reinstating the sanctions would not stop business, but it will complicate it and slow it down.”
Asked if Outotec was considering leaving the market, Algars said it was “too early to say”.
During the sanctions, Outotec made so-called “stop and go” deals in Iran, where it was paid in increments and delivered accordingly, Algars said.
He said that business started to normalize after the 2015 nuclear deal with Iran, helping Outotec to book orders from National Iranian Copper Industries Company (NICICO) and Iran International Engineering Company (IRITEC).
Algars did not disclose the volume of Outotec’s business in Iran but said it did not represent a significant share of Outotec’s total global sales of about €1.2 billion ($1.4 billion).
“Deliveries already announced are proceeding as planned and Outotec expects to complete them in the near future,” he said.
NICICO’s order is for two sulfuric acid plants for copper smelters with a value of around €50 million while IRITEC ordered process technology, worth €45 million, for an iron ore beneficiation plant.