Mining in Iran - Foreign Investments

Foreign Investments

See also: Foreign Direct Investment in Iran, Privatization of mining sector in Iran, and Tax exemptions in Iran

The government owns 90 per cent of all mines and related large industries in Iran and is seeking foreign investment for the development of the mining sector. In the steel and copper sectors alone, the government is seeking to raise around US$1.1 billion in foreign financing.

In the early 1990s the buy-back method of transaction (the government buys back the industrial project after the foreign direct investor has recouped his initial investment in the project plus a predefined profit) was introduced to bypass constitutional constraints on foreign investment and avoid potential political difficulties within the country. The scheme has government support for being an efficient means of attracting foreign capital, services and technical expertise, while reducing foreign exchange expenditures and expanding exports. If the Iranian Government is to fulfil its 20-year plan to improve the country’s mining sector, it’s estimated that US$20 billion, mostly in foreign investment, will be required.

• Projects eligible for buy-back agreements and foreign loan facilities are:

Projects that complete aluminium metal production lines

Projects that mobilise coal, iron ore, steel, copper and pigment metals production

Ferro alloys projects and gold production

• Iran imports the following equipment to support its mining sector:

Mining equipment such as drills, loaders and shovels

Support equipment such as bulldozers, graders, trucks and auxiliaries

Utility equipment such as compressed air plant equipment, water and waste-water treatment equipment

Mechanical equipment including equipment for crude ore handling, grinding, separation and treatment purposes

Laboratory and workshop equipment

Power supply and distribution equipment

Process control instruments

Most of the electrical distribution equipment for water supply and treatment utilities, along with steelworks and storage facilities are manufactured locally. There is a demand for high quality second-hand machinery in Iran. To date, doing business in Iran has had political overtones. In this regard, countries which can maintain a neutral and impartial political image in the Middle East are advantaged.