Group Iron Ore
Little joy for Iran's private iron ore exporters from nuclear deal
(Minews) - Its nuclear deal with world powers bodes well for Iran's crude oil sales but offers less for Tehran's second biggest export, iron ore, as low prices squeeze private miners out of business.

Most of Iran's private iron ore mines face shutting down if prices remain at or below current levels, hurting its exports and ceding even more market share to the world's top miners, an Iranian industry executive said.

Iron ore has lost about a third of its value this year. Prices tumbled 11.3 percent last Wednesday to a decade low of $44.10 per ton as major miners boost output amid falling demand in a bid to push out smaller producers.

"Almost the total production of private iron ore mines will shut down if iron ore keeps below $45 or $50 a ton level. I heard from a few private mine owners that they will shut down," said Keyvan Ja'fari Tehrani, who oversees international affairs at the Iranian Iron Ore Producers and Exporters Association.

Iran's Ministry of Mine, Trade and Industry was not available for immediate comment.

Small, higher-cost miners are under immense pressure from the price rout.

Goldman Sachs has said that up to half of the world's iron ore output by miners outside the top three producers - Vale, Rio Tinto and BHP Billiton - is at risk of closure.

Consultants Wood Mackenzie estimate that by 2020, Vale, Rio Tinto, BHP Billiton and Fortescue Metals Group will account for 69 percent of global iron ore exports, up from 55 percent in 2010.

Iran and six major world powers reached an historic nuclear deal on Tuesday to lift sanctions in return for Tehran agreeing to long-term curbs on its nuclear program.

The deal could bring a rapid economic boom to Iran's moribund economy, but it wont help private iron ore miners near term as it would likely boost the rial currency, hurting their export competitiveness, according to Tehrani.

Iranian iron ore is also of a lower grade than cargoes from Australia and Brazil and so has to be deeply discounted.

Roughly 6 million tonnes of private iron ore output in Iran shut down late last year, and Tehrani said another 4 million could shut down this year out of total capacity of 11-12 million tonnes.

Shutdowns would hurt exports in particular. Private mines accounted for around half of Iran's iron ore exports last year despite producing only about a fifth of the country's total output of 45 million tonnes.

"It is moving, but that which is moving (is from) public sector mines, not private mines," said Jalal Tabrizi, managing director of Iranian shipping agency Seacargo Co Ltd.

Most of Iran's iron ore exports go to China, the world's largest ore consumer.

In the first five months of this year, Iran's iron ore exports to China fell by almost 50 percent, Chinese customs data showed.

Other small producers have also been displaced as Australia and Brazil, home to BHP, Rio and Vale, accounted for 83 percent of China's iron ore imports between January and May, up from 77 percent from the same period last year.
Publish date : Wednesday 15 July 2015 20:34
Story Code: 26071
Source : Reuters