Iran is planning to halt the export of raw iron ore from March 2017 and instead sell processed form of the steelmaking ingredient to maximise returns under an era of low prices, an industry official said on Friday.
Tehran, which currently exports iron ore fines and lumps, is the sixth biggest supplier of the commodity to top market China, although its shipments are a fraction of those exported by Australia and Brazil that together accounted for 83 percent of China’s January-August imports.
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“The reason is clear. Iran prefers to export value-added products with much higher prices,” Keyvan Ja’fari Tehrani, head of international affairs at Iranian Iron Ore Producers & Exporters Association, told Reuters on the sidelines of an industry conference in the Chinese port city of Dalian.
Iron ore prices have fallen to below $60 a tonne, currently from a record near $200 in 2011 amid a glut that has forced many low-grade producers, including those in Iran, to shut.
Iron ore mines in Iran have dropped to 20 from 200 in 2013, Tehrani said.
Iran’s Gol-e-Gohar Mining & Industry Co is expected to start running its 5-million-tonne a year pelletising plant by the fourth quarter of 2016, he said.
Gol-e-Gohar is negotiating with the Iranian government to remove a 30 percent export duty on pellets so it can sell around 1-2 million tonnes of iron ore pellets by the start of the next Iranian fiscal year on March 21, 2017.
“China is willing to buy and I received too many inquiries during my current visit to Dalian,” Tehrani said.
Iran used to import 7-8 million tonnes of pellets a year, with a total domestic demand of 28-29 million tonnes, but the new supplies should end the country’s reliance on overseas purchases and flip it into an exporter, amid slow domestic steel demand, Tehrani added.
State-run Indian company KIOCL said in February it was considering building an iron ore pellet complex in Iran at a cost of about $59 million and was in talks to sell more than 2 million tonnes of the steelmaking raw material to Tehran.
Tehrani said there has been no development so far on KIOCL’s plan for a pelletising plant.
Iran, after being freed from most Western-imposed trade sanctions earlier this year, is looking to do more business globally. It is aiming to attract $29 billion in investment into its mining sector, and boost its crude steel production to 55 million tonnes by 2025 from around 16 million tonnes now.