As the energy markets swoon, the imminent impact of Iranian increased production doesn’t guarantee them instant riches. But Iran has other sources of trade, albeit not as well developed, as reported by Maysam Bizær at AL Monitor:
In a meeting with Rouhani and Cabinet members late last month, Supreme Leader Ayatollah Ali Khamenei suggested that the country’s significant potential in the mining sector should be realized as an alternative to oil. “The oil market, which falls from $100 to $40 following a sign from world powers and then actions by wicked elements in the region, is by no means reliable and we have to find an appropriate alternative. The mining sector is the best alternative,” Khamenei said.
While mostly known for its hydrocarbons, Iran is also among the world’s top 10 countries in terms of mineral resources. It has estimated mineral reserves of 60 billion metric tons, or 7% of that available on Earth. Of note, these minerals are diverse; more than 68 different types of minerals have been identified in Iran so far. These resources are reportedly worth up to $1 trillion.
This is a problem, as many mining commodities are in a state of oversupply. An example is copper. According to Wikipedia, Iran has the ninth largest reserves of copper. So how are copper prices? In a state of collapse.
(Image: NASDAQ.com)
A BBC report on copper prices is here. This is just a salient feature of an industry currently in a slowdown, as the report from AL Monitor notes:
First of all, the timing of the upcoming sanctions relief and expected inflow of foreign capital could not be worse. The global mining industry is in trouble, and a majority of mining firms are stuck in a bearish trend in the stock markets. In particular, the economic slowdown in China, a key mineral consumer, is impacting the industry around the world. The Chinese slowdown is directly hitting Iran, as China is the main importer of Iranian iron ore. Falling oil prices are also adding to the dilemma, with increasing pressure on the coal industry.
You can look at this in two ways. Iran is putting an emphasis on the wrong part of their economy. Or, they see a current weakness but believe in the long-term promise of their raw materials and are beginning development when the cost of doing so may be low. In this case, look for them to work to extract discounts and technology from mining firms interested in developing their resources. In combination with their water woes, their future does not look golden, despite the lifting of sanctions.
