Iran Mineral Output in Nine Months

Miners have had a rocky Iranian year (started March 20, 2016) so far.

When UN sanctions on Iran were lifted in January 2016, so was the chokehold on foreign investment and international trade. The horizon looked bright enough for the sector to recover from the dreadful lows of 2015.

Yet, the combination of the lingering glut in global steel markets, persistent iron ore oversupply worldwide and the aftereffects of sanctions such as loss of export markets and global banking relations have proved to be a hefty challenge.

The latest hurdle, however, came from inside the country. The government took measures to end the export of raw minerals to boost the sector’s profitability and its share in GDP.

In July, Mehdi Karbasian, deputy minister of industries, mining and trade, said the sale of a range of minerals, mainly copper and iron ore in their raw form, would be stopped in the first half of the next Iranian year (starring March 21, 2017).

The official noted that domestic demand for minerals is expected to increase with the inauguration of several processing plants in the coming months.

The government has devised plans to turn Iran’s steel industry into the world’s sixth largest manufacturer of the industrial commodity as per the goals set in the 20-Year National Vision Plan (2005-25), which stipulates the production of 55 million tons of crude steel per year.

In order to realize this figure, over 150 million tons of iron ore are required, which entails a 100-million-ton rise in production volume compared to 2014.

Later Minister of Industries, Mining and Trade Mohammad Reza Nematzadeh called on the Planning and Budget Organization of Iran to implement a 5-15% stepwise export tariff rise over a three-year period on a number of commodities deemed raw minerals, including zinc, lead, marble, chrome, manganese ores and their concentrates, iron pyrite ash, products made using direct lump iron ore reduction and granulated iron ore.

The initiative will be introduced as of the next Iranian year and go into full-force effect two years later.

The two abovementioned announcements consequently affected the domestic mineral output. Many producers boosted production to make the most of the time left before any export tariffs start to take effect, while others cut down on the output of targeted commodities.

The detailed statistics of major companies’ production for the three quarters of the current year shows the sector's rollercoaster ride to adapt to the new trade narrative.

Iran's major mining companies produced over 231.9 million tons of minerals in the nine months ending December 20, according to the latest data released by the Iranian Mines and Mining Industries Development and Renovation Organization.

The companies’ output for the Iranian month of Azar (November 21-December 20) stood at 25.4 million tons.

 Iron Ore, Steel Sector

Iron ore concentrate was the top commodity produced in the nine-month period in terms of volume. Its output stood at more than 22.9 million tons, up 18.29% compared with last year’s similar period.

Golgohar Mining and Industrial Company accounted for 9.17 million tons of the total figure, Chadormalu Iron Ore Company for 7.09 million tons, Central Iron Ore Company for 2.99 million tons, Middle East Mines and Mining Industries Development Holding Company for 2.51 million tons and Sangan Iron Ore Company for 1.12 million tons.

Most of the companies recorded a two-digit growth in output.

In fact, iron ore concentrate is one of the few mineral products with enough value-added to be deemed "processed" by the government and allowed for export without any restrictions.

In order to meet the 2025 Steel Vision goals, its production capacity should reach 50 million tons by 2018, 71 million tons by 2021 and 72 million tons by 2025, according to the roadmap proposed by the Ministry of Industries, Mining and trade.

Boosting production, therefore, is a win-win move for miners and the government alike.

Pellet production took the next spot with 18.67 million tons, indicating a 14.05% growth year-over-year. Mobarakeh Steel Company’s output accounted for 5.48 million tons of the aggregate amount, Khouzestan Steel Company for 4.728 million tons, Golgohar Mining and Industrial Company for 4.727 million tons, Chadormalu Mining and Industrial Company for 2.77 million tons and MIDHCO for 957,123 tons.

Pellet is used as raw material for steel production in blast furnaces. Its output capacity, according to the roadmap, is expected to rise to 48 million tons by 2018, 82 million by 2021 and 85 million by 2025.

Statistics by the Ministry of Industries, Mining and Trade indicate that Iran needs to import 6 million tons of pellets annually to meet the demand of its steelmaking plants. Higher output is required to tackle this shortcoming.

With a 12.34-million-ton output and 9.24% growth Y-O-Y, direct-reduced iron was the third most abundantly produced material. MSC made up the bulk of the output with 5.05 million tons. It was followed by KSC with 2.8 million tons, Hormozgan Steel Company with 929,220 tons, South Kaveh Steel Company with 841,319 tons, Saba Steel Company with 794,060 tons, Khorasan Steel Company with 730,084 tons, Ghadir Iron and Steel Company with 675,349 tons and MIDHCO with 516,181 tons.

Iran is currently the world’s largest DRI producer. Also called sponge iron, DRI is produced from the direct reduction of iron ore (in the form of lumps, pellets or fines) to iron by a reducing gas or elementary carbon produced from natural gas or coal.

The uptrend in production is expected to continue into the next year, as domestic steelmakers are determined to increase the export of semi-finished and finished steel since the local market remains in the doldrums.

Crude steel production was next on the list as its output topped 10.7 million tons and grew 2.27%. MSC was the top producer with a 5.5-million-ton output. KSC came next with 2.68 million tons, followed by Esfahan Steel Company with 1.71 million tons, Khorasan Steel Company with 472,700 tons, Iran Alloy Steel Company with 284,749 tons and Iran National Steel Industrial Group with 74,238 tons.

Steel products ranked fifth. The output of 10 steel companies amounted to 7.52 million tons and registered a 4.88% decline year-on-year. They included hot and cold-rolled strips, beams, rebars, coils, rail tracks, tubes, sheets and galvanized coils.

Despite the downturn in steel product output, Iran’s steelmakers posted a 55% growth in their nine-month crude steel and steel products exports to 4.12 million tons.

Granulated iron ore production stood at the bottom of the list with a 4.5-million-ton output, down 19.03% Y-O-Y. It was the iron ore sector’s only commodity registering a negative performance compared to last year, owing to its placement in the exports blacklist.

 Copper

The copper sector’s three largest mines extracted 116.58 million tons of copper oxide ore in the nine-month period, indicating a 3.65% decline in extraction year-on-year.

Sarcheshmeh Copper Complex, which operates Iran's largest copper reserves, accounted for 54.4 million tons. It was followed by Sungun Copper Mine with a 37.53-million ton output and Miduk Copper Complex with 24.5 million tons. The companies’ copper sulfide ore extraction was up 11.12% to 36.55 million tons for the period.

Copper concentrate was the sector’s top material. Output stood at 805,063 tons and registered a 13.15% growth year-on-year. It was followed by copper anode with 171,742 tons, down 4.20%; copper cathode with 141,803 tons, up 3.85%; and molybdenum with 29,577 tons, down 0.60%.

The upturn in sulfide ore extraction, which holds more copper content compared to oxide ore, is due to the industry’s move to boost the production and export of copper concentrate.

Concentrate is also on the export's blacklist, as it will be slapped with a 10% export tariff next year.

 Aluminum, Lead and Zinc

Iran’s three major aluminum companies’ ingot production dropped by 0.54% to 220,544 tons in the three quarters of the current year.

Iran Aluminum Company accounted for 103,244 tons of the total figure. Hormozal Company was next on the list with a 71,782-ton output, followed by Almahdi Aluminum Company with 45,518 tons.

The lead and zinc sectors experienced an 8.45% decline in its nine-month production to reach 701,077 tons. Angouran Lead and Zinc Complex accounted for the bulk of the output, producing 680,029 tons and recording an 8.66% drop year-on-year.

Nakhlak Lead and Zinc Plant came next with 21,047 tons, down 1.18% year-on-year.