TEHRAN, May 12 (MNA) – Earlier this week, in an attempt to [as the US president Trump put it] “choke off the country’s largest non-petroleum related sources of export revenue", Washington imposed new sanctions on Iran's metals and minerals sectors.
At the first glance [considering Trump’s comments], this might seem to be a heavy hit to Iran’s economy in the near future but a close look into the country’s exports data could reveal Trump’s great miscalculations. In fact, this could even be considered a “blessing in disguise” for the country’s minerals and metal industry.
Iran’s metal exports vs. US claims
When the US President Donald Trump announced the new sanctions on Iran’s metals and minerals, he said these news sanctions are aimed to cut off about 10 percent of the country’s total revenues! Now let’s take a look at Iran’s foreign trade data to see how much this claim is close to reality.
According to Iran’s foreign trade data provided by the trade ministry and customs administration, the country sold near $50 billion worth of oil in the past Iranian calendar year (March 2018-March 2019) while the total non-oil exports stood at about $44 billion, so in total Iran’s exports revenues stood at about $95 billion in the past fiscal year. That means, 10 percent of the country’s total exports revenue would be $9.5 billion.
Now let’s take a look at Iran’s metal exports in the mentioned year. According to the customs administration data and the data provided by the ministry of industry, mines and trade, the value of exports from iron, iron ore and steel sectors stood at about $4 billion while the value of copper chain exports hardly touched $1 billion, so despite the great production levels, the value of metals and mineral that Iran exports hardly accounts for five percent of the country’s total exports revenues.
The impact of sanctions on exports
Although, as we saw, the portion of exports revenues from metals and minerals is quite insignificant compared to the country’s total exports, however we will also take a look at the possible impacts of these new sanctions on this sector as well.
First, it is worth mentioning that most of the minerals and metals produced in the country are consumed in the domestic industries and only a small portion is exported.
Considering Iran’s constantly growing industry sectors, the demand for iron and steel products as well as other metals is growing accordingly.
Based on the data provided by the ministry of industry, mining and trade, in the first ten months of the past Iranian fiscal year, the total production of crude steel, steel products, copper cathode, aluminum ingot and alumina as well as iron ore exceeded 65 million tons. The same data put the volume of the country’s exports of metals in the same period at about 8 million tons that is less than 12 percent of the total production.
With all that said, however, Iran is still an importer of some metal products including steel sheets, since the country’s production in the down-stream sector does not match the demand in the industry sectors. I mentioned the sanctions to be [potentially] a blessing in disguise, and this is where it applies.
Iran has more than enough raw materials to completely supply its domestic needs and the sanctions could in fact push the country’s production and processing units to increase their capacities to process more instead of exporting raw materials. In this way, the need for importing such commodities will no longer pressure the economy.
In fact, many analysts believe that the US sanctions on Iran’s metals are not going to have as a great impact on exports as on imports of such commodities.
As Iranian Deputy Industry Minister Ja'far Sarqini said on Wednesday, the country’s metals and minerals have their own specific customers around the world which will continue buying despite US sanctions [as they have done it before].
“It seems unlikely that new US sanctions would be very effective in impeding the country’s [metals] exports and industry”, he said.
“The US' imposition Wednesday of new sanctions on Iran's metals and minerals trade may change little in the short term for Iran's steel exporters or their customers abroad……. Steel imports into Iran are however to expected continue to take a hit.” S&G Global Platts wrote on Thursday.
Iran’s minerals and metals market has already been wrestling with sanctions and anti-dumping actions, and adding new sanctions won’t change much in the market’s environment.
The country will, of course, continue its exports to the neighboring countries and other MENA nations as it has been doing so in the previous rounds of sanctions.
What is important is to take the new psychological warfare not as a negative hit but as an opportunity to thrive and come out independent and proud, like we always have.
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