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Iran's mining industry outlook in post-sanctions era
(Minews) - The possibility of a final nuclear deal between Iran and the P5+1 group (the five permanent members of the UN Security Council plus Germany), especially after the negotiators announced a 'framework' nuclear agreement on April 2 in the Swiss city of Lausanne, has generated new hopes among manufacturers and players in the industrial and mining sectors.

Mining companies are hoping that once the western anti-Iran sanctions are lifted, domestic investors will be motivated to invest in the sector, while foreign financiers will be encouraged to enter the country's mining sector, which is considered as an attractive area for investments, Persian daily Ta'adol reported.

Value Added to Increase
A lifting of sanctions will substantially boost the mining sector by enabling it to benefit from modern mining technologies and machinery, economic analyst, Albert Boghozian told Ta'adol, noting that higher investment in the mining exploration and extraction sectors will lead to development in the mineral processing sector.

Describing processing as the most lucrative area of the mining sector, Boghozian says the value added in the mining sector will increase as the processing facilities improve.

According to the analyst, a lifting of the financial and banking sanctions will also assure investors of the return on investment (ROI) and will substantially reduce the costs incurred by miners. Under the sanctions, exporters and importers had to pay a considerable percentage of their hard currency transactions to exchange offices.

But, according to mining experts, the sanctions are part of the challenges the industrial and mining sectors are faced with. They believe another major issue the sectors have been grappling with over the past years is mismanagement.

Steel First to Attract Investment
It is anticipated that in the post-sanctions era, the steel and copper sectors will receive maximum attention from domestic and foreign investors. The steel industry was the first sector directly affected by sanctions, according to Ahmad Donya-Nour, the manager of South Steel Company, predicting that the strategic steel industry will be among the first to absorb investments after the sanctions are removed.

He noted that the resources are ready and the financiers are eagerly awaiting a final nuclear deal which is expected by June 30, adding however that it will take some time for the new investments to show results, as it took a few years for the sanctions to reveal their negative impacts. "Unless the investors feel safe, they will not enter high-risk areas," Donya-Nour emphasized.

Member of parliament, Mohammad Bayatian supports Donya-Nour in anticipating a bright future for the steel sector, saying: "The steel, copper, automobile, oil, and petrochemical sectors will witness a revolution after the removal of sanctions. The lack of liquidity in major industries has caused monopoly. Such monopoly is expected to break with the entry of new investors in different industries."

According to the MP, the new post-sanctions atmosphere will also eliminate middlemen as the economy will move towards manufacturing and away from dealership. He also emphasized that the new investments should aim at strengthening domestic manufacturing and exports as a measure to minimize irregular imports which hurt the economy during the two terms of Mahmoud Ahmadinejad's presidency.
Publish date : Tuesday 14 April 2015 00:09
Story Code: 23591
Source : Financial Tribune