Undermined Mining

Iran is among the major mineral-rich countries, holding some 64 types of minerals and more than 57 billion tons of potential reserves. Despite the eye-catching figures, mining in Iran remains neglected and therefore, underdeveloped mainly in the absence of a clear vision and comprehensive plan for their exploration, exploitation and processing. Fortunately, unlike the past, in the recent years, some positive developments have taken place. In 2009, Iran produced 240 million tons of minerals.
International standards require mineral-rich countries to exploit at least 1% of their reserves annually. Taking the size of Iranian mineral reserves, Iran has to produce 570 million tons of minerals per year to meet the standards.
Mining sector particularly in terms of exploration is among the risky endeavors. The 5th Development Plan of Iran obliges the government to undertake mining exploration as a commitment since the private sector prefers to partner in exploitation and production rather than research and studies. As the major Iranian mines are located in remote areas near borders, the 5th Development Plan further requires the government to build necessary infrastructure for their development. The vast mineral reservoir has the potential to contribute 1% to GDP and thus, it is considered a competitive advantage for the country. In the past, Article 44 of the Constitution prohibited private sector's involvement in major mining activities; however, since its modification, the ban has been lifted.
Production along with employment generation can contribute greatly to the national income. However, in view of the highly potential risks involved in mining-related activities and in the absence of required resources, the private sector will not invest on the basis of verbal promises made by top officials. As a solution, the Ministry of Industry, Mines and Commerce can request the banks to grant exploration loans to the interested miners and the Parliament can also decide on relevant budgetary obligations. Those exploring mines can refer to provincial Industry Offices to benefit from these facilities. Recently, some assistance in the form of loans has been rendered to import heavy mining equipment.
Mitigating the risks involved in mining activities, a Mining Insurance Fund has been set up. The fund insures economically feasible mines in the phase of exploration based on which the insurers are entitled to receive compensation in case of business failure.
Relevant authorities have always highlighted the need to strengthen mineral processing and production. This cannot be realized without the help of banking sector. Unfortunately, the banks do not recognize a mine license as collateral. The problem was, once, raised in the Parliament's Industry and Mines Commission attended by the then Central Bank governor and was solved accordingly. The Vision 2020 document together with the 4th and 5th National Development Plans emphasize the need to increase exports and non-oil revenues. In this respect, mining is considered a potential revenue generator sector to absorb investment.
In 100 to 150 years, Iran will run out of mineral reserves as a certain amount has to be exploited annually. Therefore, it is of prime importance to give mineral processing a special attention. Currently, mineral reserves are exploited using traditional methods. Iran's proven mineral reserves are 57 billion tons that can be extended into higher figures provided that exploration continues. As to processing, it is important to conduct ore processing internally although it needs time to develop and raw minerals export cannot be ceased immediately. At the end, it should be recalled that processing adds to miners' benefits, creates employment and contributes to GDP.