Export ban on iron ore

Rocks embark on a long journey from the inner layers of Earth. They are classified by humans ranging from iron and copper to steel and other metals. There are also a wide variety of subcategories namely magnetite and hematite which are the main iron ores and others such as manganese, silicon, chromium and marmite. The journey goes on rocks and minerals from which metallic iron can be extracted and are sent either to domestic plants or to countries all around the world.
Iron is one of the most abundant elements on Earth comprising 5% of its crust. The vast majority is bound in magnetite and hematite with 70% and 72% iron respectively. The largest mines are in Australia, Brazil, China, India and the US. World resources of crude iron ore are estimated to exceed 800 billion tons containing more than 230 billion tons of iron from which 160 billion tons can be extracted.

No more export of minerals and raw materials
Mohammadreza Nematzadeh Iran's Minister of Industry and Mine has emphasized the crucial importance of export ban on raw materials and minerals. In a letter to Iran's Vice President, Mr. Nematzadeh has asked for official approval to plans for imposing tariffs on 24 exporting items including iron ore. He offered 30% tariff on raw and 20% tariff on crushed and concentrated iron ore. According to him 22 million tons of unprocessed iron ore was exported last year. "Our downstream projects such as concentration and steel production are currently delayed and I have urged that raw materials and minerals must not be exported" he said. Iran's Ministry of Industry and Mine is determined to facilitate launching pelletizing plants.
The tariffs have not been officially approved by the Economy Council despite the plans announced earlier to impose 10% tariffs on iron ore export and a three-year raise to 20%. Rumor about postponement of the plan was rejected by Jafar Sargheini Iran's Deputy Minister. The private sector in Iran is concerned about the imposed tariffs. They believe that dramatic decline in iron ore global prices and such policies will put small businesses in the red but Mr. Sargheini believes that the exports will not be affected noticeably and the maximum decline would be around 5 million tons per annum. According to figures, producers mostly exported minerals and the trend was upwards, while steel exports reached a plateau and then declined. It is attainable to become self-sufficient in steel production. For this purpose, Iran needs pelletizing facilities.

A lucrative business
According to the data released by the Iranian Customs Administration 23.5 million tons with value of US$ 1.5 billion iron ore was exported in Iranian year of 1392 (2013) and topped the list of Iran's non-oil exports. It increased by 26% in volume and 76% in value. According to Iron Ore Producers and Exporters Association of Iran, private sector accounts for approximately 12 to 13 million tons of total export with the profit of 300 to 600 billion tomans. State-owned exporters had almost the same amount of substantial profits. Government plans for imposing tariffs have been postponed while private sector is against tariffs particularly when there is recession in global economy and prices plummet. China, the largest consumer of iron ore, has reduced imports from Iran and this caused the decline in prices. Exporters believe that the new data will show the amount of export decline.

Sell at $ 60 and buy at $1000!
It is indisputable that selling raw materials with no value added has consequences for future generations. On the other hand exporting the raw materials of which final products are imported requires a special mechanism. Seyed Reza Sharestani, a member of Iranian Steel Producers Association, believes that stimulation in Iran's economy is vital and we need the know-how to stop selling minerals and start processing raw materials domestically. "A group of Iranian exporters tend to sell raw materials and minerals. Iran is one of the most resource-rich countries in the world. Unfortunately 24 million tons of iron ore and cheap fuel were exported last year while Iran imported 9 million tons of steel before the sanctions. We sell our iron ore at $60 and buy the steel at $600 to $1000. It is possible to create more than 300000 direct and hundreds of thousands of indirect jobs with those 24 million tons" he added.

Exporters' concern
Imposing tariffs and even export bans on iron ore have caused difficulties for players in global markets." 30% tariffs on iron ore was suggested in the budget of Iranian year of 1393. Due to the concerns of exporters and the private sector about the consequences of such policies, they have not been implemented so far. The cost of production has increased and the tariffs will put the producers out of business." said Abdolreza Tahsini member of Iran Chamber of Commerce. There is currently 0% tariff on iron ore exports. According to Iranian Customs Administration, the rate is $0.1 per kilo.

Strike over privatization
Workers of Iran Central Iron Ore Company in city of Bafgh struck over privatization. The strike costs the company 2.5 billion tomans per day. Regarding the two-week strike of 4000 mine workers in Bafgh, Alireza Yarahmadi told ISNA News Agency that government officials have not talked to workers and the strike is boycotted. He then pointed at public wealth and property ( Anfal , Islamic concept mentioned in the Quran)," mines are part of the public property and cannot be privatized according to Article 45 of Iran's Constitution. All we hear about is the Article 44, what happened to Article 45? There is no supervision, mines are considered as "Anfal"" he said. Iran's Vice President Ishagh Jahangiri had mentioned earlier that any privatization must be under officials' supervision. On the other hand, Head of Iranian Privatization Organization called it propaganda. Workers look for job security, Bafgh City Council speaker Mohammad Abbassi said: "The Company is obliged to complete its pelletizing projects, sponge steel plants and agglomeration and beneficiation units".
The export ban is not a comprehensive solution to all problems in Iran's iron ore industry. Minerals need to be processed and turned into steel. Iran's iron ore market is volatile these days due to the issues such as export ban, global price decline and internal problems with privatization. Meanwhile, dissatisfaction with value added tax system in Tehran's iron and steel market should not be neglected.