Document Type : Research Article
Authors
1
Ph.D. student, Faculty of Mining Engineering, Petroleum and Geophysics, Kharazmi International Campus, Shahrood University of Technology, Shahrood, Iran
2
Professor, Faculty of Mining Engineering, Petroleum and Geophysics, Shahrood University of Technology, Shahrood, Iran
Abstract
Iran is considered one of the countries with a relative advantage in the field of mining and related industries due to its important mineral resources and reserves. This issue increases the importance and priority of development programs in the mining and mineral industries sector. Copper, after steel, ranks second among the major metals in terms of value-added production in the world. Iran, with a reserve of about 34 million tons of copper, owns 4% of the world's copper reserves. This article examines the analytical and comparative analysis of copper industry development programs in Iran and India. Although both countries have started their own development programs in the copper industry almost simultaneously, India was ranked among the top economic powers in Asia in 2018 compared to Iran. On the other hand, with some economic growth indicators surpassing China, some analysts believe that this trend may continue and India may achieve growth similar to China and even replace it. On this basis, India’s strategic plans in the field of copper can greatly help in formulating strategic plans in Iran’s copper industry. According to studies conducted in Iran, the most important challenges in the copper industry include increasing the amount of government salaries and export duties, non-entry of mining and industrial machinery, round-the-clock laws, and fluctuations in exchange rates and inflation. This research has examined the damage and analysis of the strengths and weaknesses of Iran’s copper industry program, reviewed the current situation and copper industry development programs, compared it with India, and addressed the challenges ahead. Finally, solutions have been proposed for the development of this important industry.
Introduction
Iran is located on one of the two copper belts in the world and is considered one of the areas with the economic potential of copper. Evaluations show that Iran’s share of the world’s 20 million tons of copper production is less than 1.5%. The share of the industry in Iran’s gross domestic product is 7%, of which copper covers 1% of the 7%. In fact, the share of the copper industry in Iran’s gross domestic product is 1%, which is relatively low given the volume of copper mineral reserves. Therefore, considering the importance of the copper industry in the country’s economy as a productive sector and the increasing demand for this metal in the world, having an appropriate industrial strategy to maximize the use of copper mines and related industries is important and necessary.
One of the ways to develop the country quickly is to focus on the mining industry alongside export development. Industrial development is important for national development programs from various aspects. Employment, poverty alleviation, proper use of skilled labor, improvement of regional and international status of the country, meeting internal needs, and enhancing national identity are among the aspects of development that have been tied to industrial development. In this regard, according to the emphasis and statements of the upper-level documents, especially the five-year development plans in the last decade, the subject of drafting an industrial development strategy has been one of the important demands of the government and the relevant ministry so that with the determination of industrial policies at horizontal and vertical levels, the necessary institutional infrastructure for better decision-making by private sector activists can be provided in a more reassuring environment by the government.
Methods
The most important challenges in the copper industry in Iran include problems related to sanctions and the resulting lack of access to modern technologies, lack of support for small and medium-sized businesses, price differences in the commodity exchange and free market and their impact on the trade market and copper products, and the level of access of consumers to the market. The challenges of downstream industries are among the main challenges of this market. Sanctions have caused severe fluctuations in exchange rates and have affected the government's economic and trade policies, ultimately leading to increased production costs, market fluctuations, declining exports, loss of some export markets, rent-seeking, thriving intermediaries, and numerous problems in the field of financing and capital circulation of mining units and mining industries in the country.
In addition to sanctions, restrictions and obstacles resulting from the government's economic and trade policies such as exchange policies, market intervention, and mandatory pricing of mineral and metal products by the Market Regulation Headquarters, prevention of exports and providing the grounds for rent and intermediation have become a major internal obstacle to production in the country. In the conditions of the domestic market recession, most mineral and mining products have experienced a decline in exports, and among the country's economic activists, it is known as self-sanctioning. One of the most important internal obstacles in the mining and mining industries sector is ambiguity in calculating the amount of government salaries for mines, non-return of government salary revenues for expenses in the mining sector, serious conflicts between mining activities, the environment and natural resources, the intervention of the Market Regulation Headquarters in pricing mineral and metal products, and creating export barriers, inaction in policymaking for mines and mining industries on the verge of bankruptcy such as the cement industry and lack of necessary credits for capital facilities in the circulation of mining units and mining industries.
Another important issue that can be investigated in this area is the creation of mining clusters. There are many small copper mines scattered throughout the country with small reserves that can have a significant impact on the country's production with proper measures. In fact, the role of small mines in domestic production and employment is not prominent and they are not valued. As a support, small mines that are reasonably transportable and have a justifiable relationship between them can be consolidated into a consortium, and each of these dependent mines can be involved in the reserves and grade of this consortium, and then the government can also support them by providing facilities. Another effect of sanctions is the update of equipment, which has also affected the copper sector. In Iran, since most mining and industrial machinery is imported, production costs are even higher than countries that own these technologies, even under normal conditions. Now, despite the existing erosion sanctions, the entry of non-standard and inappropriate goods through the black market with a delay and at a price several times higher than the real price, plus the inability to export quality products made domestically to target markets and the obligation to stop production or sale of the produced product to the market with low or sometimes negative profit, are all part of the problems of production units. Factors such as US sanctions, severe fluctuations in exchange rates, and a set of economic and trade policies of the government have led to increased production costs, market fluctuations, declining exports, loss of some export markets, rent-seeking, thriving intermediaries, and numerous problems in the field of financing and capital circulation of mining units and mining industries in the country.
In the past, the most important problems in the copper industry in India were mainly related to the shortage and lack of access to mineral reserves and their environmental consequences. This section examines the major problems of the copper industry as well as the causes and factors of change in India's copper industry strategic document.
The analysis shows that there is a huge difference between the processing plant capacity and the copper mine capacity in India. While India's copper processing plants have a capacity of about one million tons per year, only 35,000 tons of refined copper can be extracted from the current production of copper ore in India. Copper mining and production in India only meets 4% of the country's demand.
The growth of India’s infrastructure is reflected in the growth of copper consumption in the country. The consumption of refined copper has increased at a compound annual growth rate of 2.4% from 2015 to 2019. The need for copper wire in infrastructure and renewable energy projects, an increase in automobile production (which has grown by 3.7%), and an increase in the production of durable consumer goods (refrigerators and gas coolers have increased by 9.6% and 7.0%, respectively) have led to an increase in cpper consumption in the 5 years ending in 2019 (Urvisha, 2019).
Results
After examining and discussing the problems and pathologies of the National Copper Industries Company of Iran for the implementation of its programs, it is faced with some ambiguities and questions that will be discussed below, and solutions have been proposed based on a comparison with India.
Iran, like India, faces a shortage of the necessary concentrate and ore to achieve its development goals. There are several solutions to solve these problems.
One of the effective ways to supply the necessary concentrate for the project is to expand the existing mines that are currently active and under operation.
10% of the required concentrate for the copper industry in Iran is supplied by companies that operate small mines in the country. These companies, including Chahar Gonbad Kerman, Mesdarakhtegan Takhtagonbad, Rangin Metal Copper, Kian Copper Jozam, Minakan, and Madvar Mining Production, mostly sell their products as feed to the National Copper Industries Company of Iran.
However, there are still many small copper mines in the country that are inactive. With support and capital, these mines can be revitalized and brought back into the production cycle.
Based on the findings of this research, it is essential for the government and decision-makers in this important area to focus on important issues in order to develop and formulate plans for this industry. In addition to reducing the concentration of investment in a few specific provinces, it is necessary to take important measures and solutions to streamline production, create regulations and laws, remove production and investment barriers, and implement operational solutions. The following are some of these measures:
Developing and approving a comprehensive plan for nationwide exploration as an upper-level document and the most important pillar of sustainable supply of mineral materials in the shortest possible time.
Allocating a significant and specific budget from the profits of IMIDRO and profitable specialized state-owned companies as a percentage of annual profits to exploration activities and obliging the implementation of exploration operations within the framework of the comprehensive plan for nationwide exploration.
Prohibiting the government from engaging in business activities and obliging the transfer of mining management and production units to the qualified private sector.
Amending relevant laws and regulations, including; Resolving the problem of blocked areas by government agencies, Amending customs laws for the import of machinery and other mining areas and Amending export laws.
Discussions
Iran and India are among the first growing countries with development plans. In 2018, India was ranked among the top economic powers in Asia compared to Iran. On the other hand, with some economic growth indicators surpassing China, some analysts believe that this trend may continue and India may achieve growth similar to China and even replace it. Therefore, India's strategic plans in the field of copper can greatly help in formulating strategic plans in the copper industry of Iran. Exploration operations in a large part of the country's area have not yet been completed, and there is a need for planning and expanding executive activities in this area. In the mining sector, there is currently no desirable situation in the country, and the production of basic metals such as copper and steel is between 1 to 2 percent of the mineral reserves, which is less than global standards. In general, as mentioned, the existing problems in the country's development plans, especially in mining plans, can be divided into problems in program goals, planning system, approval process of development plans, implementation process of development plans, and how to monitor and evaluate programs. Studies conducted in the copper industry section also show that the capacity of cathode production factories is not consistent with the amount of mineral extraction, and the extracted mineral material provides almost half of the capacity of the factories. It is also necessary to plan the objectives of the programs for the production of cathode copper based on the existing reserves and the country's potential in supplying concentrate and concentrate.
In addition, the country’s internal needs and its potential for exports due to sanctions should be considered in these goals. It seems that solving problems such as easier import of mining machinery, given the country’s disorganized transportation fleet, reducing government salaries, freeing up areas, tax exemptions for exploration activities, lack of pricing for copper exports or sales on the commodity exchange, removing and amending cumbersome laws, and developing diplomatic relations can make the future of the copper industry in Iran clearer. Another important issue in this area, compared to India in recent years, has been the problem of feed and concentrate shortages. India’s strategy for expanding existing mines, reopening abandoned mines, and exploring new and undeveloped mines has been a factor in growth and development in developing countries such as India. In the eighth development plan In 1992, India seriously invested in private and foreign investment in the copper industry, while in Iran, this issue still seems very distant. Another important issue in this area, compared to India in recent years, has been the problem of feed and concentrate shortages. India’s strategy for expanding existing mines, reopening abandoned mines, and exploring new and undeveloped mines has been a factor in growth and development in developing countries such as India. In Iran, this industry has not yet had a clear strategy in planning and production, even in state-owned mines.
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