The correct approach to steel and mineral industries

Internal barriers of the mining and mineral industries chain and recommendations to the 14th administration for facilitating the steel, mining, and mineral industries sector

Abstract

Today, the Islamic Republic of Iran is recognized as one of the largest producers and exporters of steel and minerals in the world. In the Sixth Development Plan, the steel production industry and steel products are considered one of the driving forces of the country’s economy, contributing significantly to achieving the 8% economic growth target by the end of the plan. However, it is observed that in the first three months of 1403, production and export of steel products and mineral industries have faced a decline. This decrease is due to various internal and external challenges that the administration must work to address.

Some key headings of this article are:

Internal Barriers in the Mining and Mineral Industries Chain:

1. Energy Shortages: Limited electricity and gas supply, along with industrial shutdowns, have hindered steel production, leading to significant production losses.
2. Currency Regulations: Discrepancies between free-market and official exchange rates discourage exports, despite surplus steel production capacity.
3. Price Control: Government interference in market pricing disrupts the stock exchange and creates price manipulation instead of discovery.
4. Unplanned Imports: Despite surplus domestic production, unneeded imports of mineral products, like steel sheets, continue, straining local capacity.
5. Steel Plant Permits: Over 120 million tons of steel production permits have been issued without adequate infrastructure, hindering efficient use.
6. Sanctions and International Tensions: Sanctions and international conflicts limit export routes and increase costs due to intermediaries.

Other challenges, like export duties and canceled tax exemptions, further slow down the steel industry’s growth.

Suggestions for the New Government to Facilitate Steel, Mining, and Mineral Industries:

1. Strategic Planning: Re-establish comprehensive planning for industries, similar to the past practice, to address current challenges and support growth, as seen in the steel industry.
2. Energy Shortage: Address the 15,000 MW electricity deficit through increased power generation, attracting investments, and better household consumption management.
3. Gas Industry: Streamline the privatization of gas fields with a proper investment framework.
4. Currency Exchange Reform: Adjust exchange rates for exporters, based on expert discussions, to improve market conditions.
5. Commodity Exchange: Avoid government intervention in pricing, focusing on deregulation and proper guidelines.
6. Regional Tensions: Reduce regional and global tensions to mitigate risks to industries.
7. Issuing Permits: Issue new permits based on energy availability and infrastructure needs after expert consultations.

This study was conducted at Iranian Steel and Mining Industries Think Tank by Seyed Ahmad Asgari in 2024.

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