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Iran's confirmed mineral deposits stand at 24 billion tonnes.

There are 2,700 active mines across Iran, producing 60 diverse products.

Iran's copper reserves, pure by a rate of 0.8 per cent, are estimated at 2.6 million tonnes.

Presently, 90 per cent of the mines are run by the private sector, five per cent by the state sector and the remaining five per cent controlled by other foundations and municipalities.

The new mines and metals law has addressed and foreseen mechanisms to reduce investment risks.

The new law allows an exploitation period of 25 years, asserting the exploitation license is no more a worthless piece of paper, but a valid document to secure banking guarantees.

In order to improve quality of the manufactured goods, measures are in place to launch joint ventures with foreign parties.

Global Status of Minerals and Metals
The share of trade in minerals and metals in global commerce is twice as much as that of energy. The world's steel trade outstriped the overall oil revenue income of the Organization of Petroleum Exporting Countries (OPEC)--even before the historic slumps in crude prices.
Minerals and metals hold 900 million dollars of which, the volume of global trade exceeds eight trillion dollars annually. Meanwhile, the global transactions of chemical substances stand at 52 billion dollars, and that of non-ferrous quarries at 154 billion dollars.


Iranian Mines
With the exploration of 100 million tonnes of 60 different minerals, the Islamic Republic of Iran is among the ten leading countries holding the largest mineral deposits. Thanks to industrialization of the mining sector, Iran's present share in tapping mines has currently surged to eight million tonnes, from 800 thousand tonnes in 1978.
The country's mines total 2,700, over a quarter of which, extract sand and grit.
90 percent of the mines are being run by the private sector, with only five percent controlled by the state, and the remaining by other foundations and municipalities.
In the meantime, the value of minerals has surpassed two trillion rials, with their added value reckoned at 1.4 trillion. The share of minerals to the added value of the mining sector hovers around 25 percent, and to the GDP at 0.6 percent.
The metals' (intermediary industrial units) sector achieved only 24.3 percent of the 32.4 percent target set for the 1989-1997 period. Likewise, the mining sector failed to chalk up its 19 percent growth rate target.
According to estimates, Iran's largest mines are iron ore with deposits of 4.7 billion tonnes, 0.8 percent pure copper with 2.6 billion tonnes, and two billion tonnes of coal stone.
Meanwhile, cartographic maps of 70 percent of regions rich in minerals have been drawn with a magnitude of one hundred thousandth.
Investments allotted to research on the mines and metals sector during the First Development Plan grew ten-fold, compared to 600 million rials in 1988. The fulfillment of 42 projects, out of a total of 140, saved the state 225 million dollars annually.
Chief among the research projects were zinc melting, the inauguration of a 30-thousand-tonne ferromanganese manufacturing unit, the designing and molding of centrifugal pads, and the raising of quality construction materials and refractory bricks.
As a country with rich mining potentials, Iran is capable of improving the quality of its mineral exports and boosting its share of the world economy through the use of global technology, and its domestic technical and scientific know-how.
Any investments in the mining sector will boost the country's revenues, ease the state economy's reliance on oil proceeds, decrease the rate of unemployment, and spur other related sectors. In the post-Islamic revolution years, the mining sector has remarkably grown to capture a larger share of Iran's exports to other countries.

Performance of the Mining Sector
Generally speaking, activities of the mining sector fall into three major branches--construction materials, non-ferrous minerals, and ferrous materials--each of which contain the following substances:

• Construction materials: limestone, gypsum, rubble, graphite, travertine, china clay and marble
• Non-ferrous materials: coal stone, orpiment, barite, zeolite, bentonite, kaolin, industrial clay, diatomite, pearlite, salt (water, stone), mica, vermiculite, silica, dolomite, sulphate, phosphate, talc, feldspar, casting sand, fluorine, turquoise, magnesite, chalk, asbestos, shell, boracite, magnesite sulphate, bitumen, red clay, yellow clay, pegmatite and porcelain
• Ferrous materials: iron ore, copper, chromite, plumb and zinc, gold ore, manganese, bauxite, antimony, cobalt, celestine, alum and nepheline

Performance of the Metals Sector
Steel
The main steel mills of the country are the Isfahan Steelworks with a 2.4 million ton of annual output, Khuzestan Steel Company with 1.9 million tonnes, and Mobarakeh Steel Company with 2.7 million tonnes.
The main projects for the expansion of the steel sector are as follows:

• Expansion of Sangan mine to a capacity of 1.8-million tonnes
• Expansion of Chadar Molu iron ore quarry to a capacity of three million tonnes
• Expansion of Gol Gohar iron ore quarry to a capacity of three million tonnes
• Expansion of Choqart iron ore quarry to a capacity of three million tonnes  Agreement have been reached,(Deals have been clinched) to raise steel output by 12 million tonnes per year.
  

Copper
Iran's deposits of copper, with a purity rate of 0.8 percent, are estimated at 2.6 billion tonnes, accounting for five percent of global reserves. The mines and metals sector is projected to boost output by the end of the Second Development Plan to 200 thousand tonnes of cathode copper. The viable deals have reportedly been sealed.

Aluminium
Aluminium is a strategic metal, second in importance to steel. The world's present production of aluminium stands at 20 million tonnes. Currently, alumina, the raw material of aluminium, which is extracted from bauxite, is imported from abroad.
The imminent inauguration of a national alumina production plan is expected to meet national demand by an annual output rate of 28- thousand tonnes. Plans under way in the aluminium sector are as follows:

• Expansion of the Bandar Abbas Aluminium Complex to a capacity of 110 thousand tonnes. The unit is already producing 10 thousand tonnes of steel per year.
• Qeshm Aluminium Company, run by the private sector, with a capacity of 30 thousand tonnes
• Production of alumina from Azarbaijan's nepheline, with a capacity of 80 thousand tonnes. The unit is expandable to 200 thousand tonnes.
• Alumina production from imported Guinea bauxite, with a capacity of 1.1 million tonnes

Zinc
Scientific studies estimate Iran's zinc deposits at 94 million tonnes. The figure may probably reach up to 230 million tonnes. It is forcasted that Zinc production will surge to 70 thousand tonnes by the end of the Second Five-Year Development Plan, and to 100 thousand by the year 2006.
The Anguran zinc melting company and a number of other projects in Bandar Abbas and Zanjan were commissioned in 1997.The 30 thousand tonne Bafq Zinc Company is scheduled to become operational in the foreseeable future.

Plumb
The nominal production capacity of plumb exceeds 40 thousand tonnes, whereas the present output lags behind by 10 thousand. Raising the capacity of Zanjan plumb company to the nominal capacity and equipping the plumb and zinc mines of Mehdiabad mine in Yazd, are among the major projects aimed at expanding zinc production.

Gold
The world's gold production amounts to 2,097 tonnes, Iran's share of which, is a meager 640 kilograms per year, extracted from the sludge of Sarcheshme and Muteh copper quarries. The gold reserves of Azarbaijan and Muteh are reckoned at 100 tonnes.


Exports of Minerals and Metal Products
A total of 216.4 million dollars worth of minerals and metal products were exported in the year 1997. In the first seven months of 1998 alone, the figure reached 190.4 million dollars.
Table 1 illustrates in detail the mineral items and metal products exported during 1997 and the first seven months of 1998.

Table 1 (A)
comparison between exports of minerals during 1997, and the first seven months of 1998
The weights in tonnes, and values in dollars.

Table 1 (B)
Comparison between exports of metal products during 1997, and the first seven months of 1998
Weights in tonnes, values in dollars.

Table 2
Exports of steel products, based on the type of product and exporter unit during the first seven months of 1998
Amounts in tonnes, and values in dollars.

Review of the 1998 New Law On Reduction of Investment risks
It is interesting to note that investments in the mining sector bear five characteristics which make it distinct from other sectors: First, mining investments are capital-incentive. Second, they are highly risked. Third, they take a long span for fulfillment. Fourth, the investor does not have any freedom in decision making regarding the project and Fifth, the mineral deposits are non-renewable.
Due to the above factors, investments in the mining sector are highly staked, and unpredictable in terms of result. Yet, as the work proceeds from exploration to processing, the perils phase out. In other words, exploration bears the highest risk of investment among the stages.
One of the instrumental ways to reduce stakes in the mining sector is to give the necessary assurances to public and private investors, as well as to guarantee the loans paid by the financial institutions.
The new mining law of 1998 has taken heed in reducing the stakes of domestic and foreign investments in the mining sector.
Under Article Eight of the new law, the Ministry of Mines and Metals cedes control of the mine to the discoverer. Should the discoverer fail to submit his demand to tap the mine, the new explorer will reimburse the exploration costs in favor of the discoverer.
This means if an investor discovers a new mine, he can claim ownership, an issue which is seen as a major assurance for investment. The previous law, however, failed to envisage the right of ownership for the investor, though he discovered a new mine.
Under Point Two of Article 10, the government has provided the necessary guarantees over the deposits of the mine.
Point three of the same article focuses on the security of investments. An exploitation license is accounted for, which acts as a binding official deed, valid within a 25-year period, with the option to be extended or ceded. The period of the license is in accordance with the reserves of the mine. Such conditions are certain to provide investors with the necessary guarantees they have been seeking.
The former law also failed to recognize the ownership right of a discoverer over a large mine. In other words, if an investor discovered a mine, the government had the right to declare it as a big mine, and claim ownership.
The new law has rectified this condition, asserting that the Ministry of Mines and Metals considers all mines small, unless otherwise legally proven and approved by the council of ministers. In such a case, the cabinet will determine the manner in which the mine is to be tapped.
One of the priorities of the new law centers on the preferential profits, since mining operations should be more profitable than other economic activities.According to the new law, the explorer is entitled to claim ownership of the refuse produce during and until the end of the exploration period only.
In a bid to spur private-sector investment, article 16 of the new law has assigned the Ministry of Mines to take control of the processing activities, which were previously held by the Ministry of Industries.
In other words, the Ministry of Mines should consider the production line--including exploration, tapping, processing and mineral industries--as a continuous process. Thus, investors may also set up new installations to process the minerals.
One of the outstanding points of the new law favoring the private sector is Article 23 which asserts that any measure by the state institutions on the utilization of minerals, is bound to receive a permit from the Ministry of Mines.
Under Article 26, the minerals--even if categorized national resources--will be under the control of the Mines Ministry as national coffers, until the end of the mine's age, and that the ministry has the right to transfer it to exploiters.
The most significant point guaranteeing the security of investments is Article 29. The article stipulates that in order to stabilize economic calculations and the production of minerals, the provisions imposing extra expenditures on the sector have been removed. As a matter of fact, the mine exploiter should only pay the mine's duties to the government.
Article 31 envisages the setting up of an investor insurance fund in order to offset the high stakes of investment in the mining sector. Thus, if investments prove unprofitable, the fund can meet some of the expenses. The article has envisaged a common role of investment for the fund in this sector.
The law has also foreseen incentives for wooing foreign investors. All institutional and individual parties may be applicants for investment licenses and other legal facilities.


Prospects
Iran boasts a sizeable number of mines and enjoys great potentials for the production of soft stones such as marble. In line with this, foreign investors are encouraged to enter into joint ventures with the Iranian contractors and co-finance the exploration activities.
Instrumental to the expansion of stone exploration activities was the formation of Kian Sang Company. The firm is one hundred per cent run by the private sector and its proprietors are stone miners, exporters and stone-cutting factories.
The Ministry of Mines and Metals, the Iran Chamber of Commerce, Industries and Mines (ICCIM), and the Ministry of Industries have all fully supported the company, and foreign investors are urged to co-operate with the foundation, so that.
The company can supply its needed stone from the company and sell them globally.
So far, a number of Italian, Japanese and Singaporean companies have pledged co-operation with the company. The present policy in Iran is to support joint Iranian-foreign ventures, so as to raise the quality of goods and penetrate the international markets.
The new mining law, the draft bill of which passed the cabinet in early 1999, has paved the grounds for the expansion of the private-sector performance and foreign investment.
Currently, the Ministry of Mines and Metals is reviewing requests from Australia, Canada, South Africa, France and China to embark on joint ventures in the exploration of mines.


Minister Pledges More Legal Facilities
"The new mines law offers all kinds of incentives for the further participation of the private sector in the exploration and exploitation of mines," said the Minister of Mines and Metals, Eshaq Jahangiri, at a seminar attended by representatives from the ICCIM.
"The most beneficial task by the state economy is to prepare a secure and proper atmosphere for any endeavor concerning development, since grounds for guaranteed investment are fully provided," he said.
The minister also cited expansion of intermediary industries as a factor of growth among the developed countries.
"The new law and its executive regulations are devoid of the preventive factors which bogged down the previous policies on the participation of private sector in the exploration and exploitation of mines," he said.
The new law has made it almost impossible to easily revoke an exploitation license, and there are certain provisions and indices in this regard," the minister added.
Noting the extension of the tapping period to 25 years, he said that the reduction of formalities for receiving exploitation licenses is one of the prominent points of the new executive regulations.
"Under the new regulation, the exploitation license is no longer a piece of paper, but a valid document for securing banking guarantees," he added.