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    Iran's mineral potential estimated at $1 billion yearly

By A Staff Reporter
Gulf News
August 7, 2000

Dubai - Iran has the potential to earn nearly $1 billion each year from exports of mineral wealth (excluding oil, gas and downstream products), an Economic Intelligence Unit (EIU) report said quoting industry estimates. "Mineral deposits, while relatively small, remain significant for the Iranian economy and for the global mining industry.

By some industry estimates, mineral exports could yield Iran some $1 billion per year. Add to this the fact that investment in this sector is not subject to U. S. secondary sanctions and it is the principal target for privatisation," EIU's 'Business Middle East' said.

It added, with aid of foreign capital and expertise, extensive copper and zinc deposits could yield significant hard-currency earnings.

Quoting the Deputy Minister of Mines and Metals, Mohammed Taqizadeh Ansari, the report said companies from Canada, the UK, South Africa, Australia and New Zealand have been scouting possibilities.

A big attraction has been gold. A New Zealand company recently signed a preliminary agreement to build an industrial complex near the Mouteh gold mine in Isfahan province. Whatever the attractions of gold mining in Iran, it is copper and zinc that hold the most interest because of their abundance.

Canada's Cominco, the world's largest zinc concentrate producer is negotiating with Iran Zinc Mine Development for rights to excavate Angouran zinc deposits in the north-west. It is looking into building a plant to produce 100,000 tonnes per year of refined zinc.

The problems facing potential investors in the mining sector include restriction on foreign ownership to 49 per cent, uncertainty over whether investors will own resources in the ground, nature of contracts, taxes and repatriation of profits.

"The Iranian government is trying to smooth the way as much as possible, although outright ownership of mineral deposits is unconstitutional and is likely to remain so," the study said. Few companies may prefer the "buy-back" deal offered by the state.

Iran has offered some investors the possibility of leasing mines for 25 years and is looking into tax breaks to attract investors.

Swedish-Swiss engineering group ABB and an Australian company have recently signed a $74 million deal to build two ferrochrome production plants in Fars and Kerman. Each plant will have an annual capacity of 25,000 tonnes.

The deal was signed with two private Iranian firms--Baft Ferrochrome Industrial Co and Navid Ehya Sepahan--the first such joint venture agreement involving a buy-back scheme. The AFP news agency said in June Iran has eliminated both export-deposit requirements and the ceiling on export credits fornon-oil products.

"Exporters will no longer be required to effectively make bank guarantees before exporting their merchandise," the report quoted a top commerce ministry official as saying.

An Iranian customs report said in the beginning of June that non-petroleum exports dropped 33 per cent in the previous two months from the same year earlier period.

This affected the five major categories of these exports--carpets, pistachio nuts, chemical products, steel and copper. In the April-May period, Iran exported $54 million in carpets, $35 million inh pistachios, $26 million in chemical products, $22 million in steel and $13 million in copper.


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