Iran is eyeing to raise iron ore production capacity to 100 MnT pa by the end of this year.
To understand the impact on iron ore and DRI scenario better, SteelMint interviewed Mr. Amir Ali Akbari – one of Copper Star General Trading Manager in Iran. The company is into exporting iron ore because of long term contracts with mines apart from selling cargoes in exchange. Below are the excerpts of the interview:
1. Heard Iran is planning to raise iron ore production capacity to 100 MnT pa by end of this financial year. What are the increasing capacities coming up and from which regions?
Iron ore production during 2014 was about 63 MnT and today it is about 75 MnT per year that should be increased to 100 MnT according to Ministry of industry, Mines and Commerce. Also production capacity of Concentrate was 28 MnT pa that is 46.5 MnT pa today that should be increased to 55 MnT pa by end of this year.
Capacity for production of pellet in 2014 was 21.5 MnT pa and it is 31 MnT now that would be 45 MnT by the end of this year.
On 1st of August, a 5 MnT pa pellet making plant was inaugurated by Mohammad Reza Nematzadeh, Minister of industry making it the biggest reserve in north-east Iran.
2. How adding up iron ore capacities will be useful to local DRI plants in Iran?
Production capacity of DRI was 18.7 MnT has increased to 30 MnT today and planned for 34.5 MnT pa by the end of this year. Thus rising iron ore production capacities will benefit local DRI plants in Iran.
3. How do you see the impact of increasing capacities on iron ore prices?
Emphasized with few coming years production capacity of Concentrate and pellet in Sangan deposits should be increased to 22.5 MnT and 17.5 MnT pa accordingly that means 40 MnT of iron ore will be available to feed local concentrate and pellet units.
Since most of this increase in capacity would be used in Iran and probably a small portion for exporting, I believe that impact on global prices may not be that significant.
4. We heard that private owned iron ore miners have asked for some revision in duty structure in iron ore. What are the currently levied duties and what are they looking for?
Currently , only pellet is subject to export tariff. About duty for exporting iron ore, we are awaiting for government decisions because exporters are not willing to pay any duty.
Due to long distance between mines and ports in Iran , mine owners are not able and interested to work when price is less than USD 70/MT. But I believe that a good equipped mine can work with prices not less than USD 60/MT but ideal price is USD 65 -70 for mine owners.
5. How are the current sentiments prevailing in Iran iron ore export market?
Prices are on upward trend but I am not optimistic and I expect prices to remain in the range of USD 70-72/MT, CFR China for Fe 62% fines. Of course this estimation is directly related to steel prices in China market and no doubt that steel mills looking for lower iron ore prices to benefit themselves.
6. Have you recently concluded some iron ore export deals. Please elaborate on the deals and quantity sold.
Our company exports magnificent amounts of iron ore because of long term contracts with mines and participation in auctions. About 80% of magnetite cargoes we export is with +58% purity and we can sell cargoes with sulphur (1.5% max) for concentrate factories in China.
Last month we had 2 shipped 55,000 MT vessel and we have 2 more shipments this month (August).
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