Iran offers mining riches post-sanctions, but investors cautious

Mon Feb 15, 2016 1:05am EST
 
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By Eric Onstad

LONDON (Reuters) - Iran's rich deposits of zinc, copper, gold and other minerals are tempting international investors after the lifting of Western sanctions, but development of the sector will take time and problems will have to be overcome.

A slump in metals prices and uncertainty about working with the Tehran government, which controls virtually all the country's mines, means that many foreign mining firms are not scrambling to sign deals.

Nevertheless, some agreements have already been struck and other foreign firms have been looking at Iran's mining and metals sector in the weeks following the scrapping of sanctions as part of a nuclear deal, which went into force last month.

Iran, which boasts one of the world's largest undeveloped zinc projects and myriad other mines, has been trying to lure investors since it became clear that sanctions would be lifted under last year's deal signed by Tehran and six world powers.

Iran's state-owned mines and metal holding company IMIDRO told an Australian mining conference in November that its mining sector needed $20 billion of investment by 2025.

"Iran absolutely has world class mining assets, which have hitherto been shrouded from investors, but we're in the depths of one of the darkest, worst downturns in mining for some time," said Neil Passmore, chief executive of Hannam & Partners boutique merchant bank in London.

The slump in commodity prices has hit international mining firms, forcing them to sell assets, cut dividends and slash capital spending to preserve cash, but some deals with Iran are still being done.

"During the six to 12 months that it's looked likely sanctions would be lifted, people have been starting to do some work and now that things have opened up, they're increasing the pace," Passmore added.   Continued...

 
A Rio Tinto logo is displayed on the front of a wall panel during a news conference in Sydney November 29, 2012. REUTERS/Tim Wimborne