As the oil markets remain focused on the re-emergence of Iran as a major oil producer following the recent lifting of sanctions, another oversupply storm is brewing as the Islamic Republic appears keen to start mining its substantial metals reserves.
On January 17 Iran emerged from years of economic isolation as world powers lifted sanctions in return for curbs on its nuclear weapons ambitions. The controversial deal, stickhandled by U.S. President Obama, will free up tens of billions of assets and allow foreign firms to do business with a country once (and still by its enemies) considered an international pariah.
The addition of 500,000 barrels of oil a day could further depress the price of crude oil which is struggling to break through a resistance level in the low-$30s, although there have been rumblings lately that Iran may increase output more gradually than initially thought, in order to prevent adding downward pressure on prices.
Iran relies heavily on petrodollars for its foreign exchange; the drop in oil prices has hit its treasury especially hard, with losses in the billions. That has led President Hassan Rouhani and other members of his government to focus on non-oil exports, including minerals, which up to now have been underutilized.
According to various sources, including the U.S. and British Geological Surveys, Iran is among the top 15 minerals-rich countries, with over 700 billion tonnes of potential reserves – about 7 percent of the world’s total – worth over $700 billion. Among its mostly untapped deposits (less than a tenth of the country has been surveyed) containing 68 types of minerals, the most important are zinc, iron ore, coal, copper, lead, bauxite (aluminum) and uranium.
There are an estimated 3,000 mines, which are around 90 percent state-owned. Iran is the fourth-biggest supplier of iron ore to China and has the world’s ninth largest reserves of copper at 32.5 million tonnes. The country is also a major Middle Eastern steel producer.
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