In times of economic downturn, the world has the best opportunity to invest in mines

In times of economic downturn, the world has the best opportunity to invest in mines
  • 2021-04-27
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Given the steady jump in mineral raw material prices and increasing operational challenges over the past decade, we must strive to create value and secure competitive advantage for the future of the mining industry through strategic focus and operational excellence in the mining business and high levels of capital.

According to the International Iranian Stone Exhibition, with the outbreak of coronary heart disease, the economies of countries have entered a new phase at the same time, which certainly will not be the same way to revive the economies of different countries, and access to vaccines and debt issues The factors will be the difference, and developing countries will be most vulnerable.

The first consequence of the coronavirus outbreak was that industrialized countries blocked the arteries of investment in developing countries in the first six months of 2020. According to the International Monetary Fund, this has caused developing and developing countries to lose more than $ 100 billion in foreign capital.

This is a crisis the world has never seen before. No improvement is expected in the short term. In the 2008 financial crisis, the world economy shrank by only 0.1 percent, while the International Monetary Fund estimated growth to shrink by 3 percent.

In a 2015 report on Iran's economic outlook studies, the Mackenzie Institute predicted that Iran would achieve an economic growth of over $ 1 trillion by 2035, with an average annual growth of 6.3, creating about 9 million jobs. Of course, Mackenzie noted at the beginning of the report that the political environment is important for economic achievement, and that our statesmen should be aware that economic diplomacy is the biggest missing link in the country's macroeconomic structure.

In this report, the speed of Iran's economic development is seen on four factors:

1) Optimizing the return on wealth of Iran's natural resources (especially oil and gas as propellants and mining as a neglected field).

2) Transformation of large domestic industries (for example, the Turkish automotive industry, for a small 60% of the Iranian automotive industry).

3) Accelerate the transition to a knowledge-based economy

4) The need to modernize the physical infrastructure

Now, considering that the potentials of natural resources, especially the reserves of Iran's non-oil mines, are defined as the levers of Iran's economic development, isn't it time to make smart and prudent decisions in the field of mines?

Today, the crisis caused by the outbreak of coronavirus can slow down the economic growth of developed and industrialized countries for one or two years, but the same crisis can lead to 10 years of damage in developing and developing countries such as Iran.

According to forecasts on the outlook for the global economy, global economic activity fell to 5.2 percent in 2020, the largest recession since the aftermath of the 13.8 percent recession caused by the aftermath of World War II.

Over the past 18 months, the value of our national currency has fallen sharply against foreign currencies. As a result, companies that have taken out foreign loans in dollars and euros will now have to spend more money to pay off their debts, leading to the risk of widespread corporate bankruptcy.

The corona could reduce Iran's economic growth rate by 2 to 3 percent. The damage caused by this disease to the Iranian economy is estimated at between 20 and 30 billion dollars.

When the Iranian economy, according to the estimates of the National Statistics Center during the first 9 months of last year, has faced a negative growth of 1.2 percent; Is liquidity expected to enter production? Production that is declining and the investor has no incentive to enter the field of production ?! Our economy is shrinking sharply and domestic investors are fleeing to other countries, especially neighboring countries such as Armenia, Turkey, the Republic of Azerbaijan and Oman. There is no country in the world like Iran whose businessmen and business activists are forced to start a business abroad.

Under these conditions, and without learning from the past and without knowledge and wisdom, we will definitely be stable along with the five countries of Zimbabwe, Venezuela, North Sudan, South Sudan and Argentina with inflation above 20%. But what is important in the current situation is for the private sector to gain power in our country. We are still proving that we need the private sector for development! We are still negotiating with policymakers and those in charge of the country's economy to realize the rights of the private sector. Due to the isolation in which it is engaged, Iran's economy is moving away from world standards every day. We are still the country of licenses and it is enough to look at the neighboring countries to see if we have the first rank of licenses! According to a study commissioned by McGill University of Canada as one of the top universities in the world in the field of mining, various risks in the field of investment in Iran's mining sector were studied and the operational risk in this report is about 63% for Investors are defined in the field of mining.

Mining machinery makes up the bulk of a mining operator's capital; Extraction method, proper selection of machinery (appropriate to mining activity), proper use and service, maintenance and financial management of the project are very effective in making mines competitive.

The price of machinery is due to various factors that are not controlled by machinery dealers. If the purchase of machinery is done with accurate expertise, the payback period is short and the estimated profit is definite. The cost of purchasing machinery is not the only factor that makes mines uncompetitive, but the right choice and use of machinery is the only way to compete internationally. Unfortunately, so far, no special support has been provided by the government in the field of smoothing the laws and facilitating the entry of machinery of the mine production line. Not only is the barrier of contractors and consumers of these production line machines increasing in various ways every day. Financial-economic risk in Iranian mines is about 90% and the risk of instability in government policies and regulations is 79%, socio-political risk is 73% and technical risk is 68% of the major risks in the McGill Canada report for investors in Iranian mines. Has been.

The mining roadmap, as a comprehensive guide to achieve the ultimate goal of the production leap, is placed on the agenda of the sector policymaker with the approach of a specific movement strategy in the mining and mineral industries. The vision for this important economic sector in the country (mining and mineral industries) needs to be developed in the areas that are moving in this direction. Strategy in any country is like a puzzle in which no development will take place in any country if its pieces are not put in the right place.

Achieving economic growth in the horizon of 1404, especially in the mining sector, requires development in the sectors parallel to the mine. If there is no development and synergy in these sectors, the mining industry will not develop. For example, it should be emphasized that the share of mining in GDP is 1.1 percent, which reaches about 6.1 percent with the sum of mining industries, but why have we not progressed like other mining countries despite having high mineral potential ?? There are several reasons, the most important of which is the lack of investment in mining exploration. Exploration in mines is high risk and it is the duty of the government to minimize the risk of investing in preliminary and detailed exploration and to open the space for the entry of private sector investors. Also in another example, it should be said: different plans for the development of different sectors in the fields of aluminum, steel, copper, etc. are considered in the horizon of 1404, but if the related fields, including transportation, do not develop, there is concern among economic actors in the mining sector. Investors will find an increase in the movement of minerals.

It is no secret to any of the mining activists that Iran has about 7% of the world's mineral reserves and is among the top 14 countries in terms of mineral reserves with a value of about $ 770 billion. Of course, managing the use of this vast and valuable field requires a centralized structure, intelligent and coherent management, and at the same time flexible, so that every day, by statistics and information received from reputable domestic and foreign centers, it compares itself with the world mining economy environment. Update that unfortunately such a policy is still one of the aspirations of Iran's mining activists.

Today, considering the importance and role of this key sector in the economy, it is time to make prudent and intelligent coordination in this multi-identity structure, because the necessary coordination between the Deputy Minister of Mines of the Ministry of Industry, Mines and Trade, Imidro, Geological Survey, Organization Atomic energy, the Ministry of Oil, natural resources and the environment are not being done properly, and in other words, the restoration of a single window in the country's mining sector is a must. It must be admitted that today, in a world of recession, there is the best opportunity to invest in mines, because I believe that this recession will not last. The mining equipment market and the smart mining technologies market are two important and growing markets in the world mining industry by 2025, so that the outlook for global mining equipment competition will exceed $ 188.77 billion by 2025; While in 2017, this figure was 106 billion dollars, and this shows a growth of 7.2 percent; Hence, it must be concluded that the increase in consumption of metal and mineral goods and the increase in demand for minerals will lead to market growth by the end of this year. The congestion of the laws of the governments and the policies of the mineral producing countries will increase the price of raw materials, which will probably be one of the obstacles to the growth of the market in the coming years. On the other hand, increasing demand for technologically advanced equipment and increasing construction activities for the construction of roads and railways in mountainous areas will create new opportunities in the market.

Development of a detailed plan and roadmap for the country's minerals with a scientific approach to the planning process and efforts to maintain diplomatic and economic relations with other countries, especially neighboring countries, efforts to create new international markets, as well as the need to maintain and develop existing markets, increase the budget In the coming years, and the rapid revision and amendment of provisions of the Mining Law with a view to the future of mines are other necessary measures to support and disrupt the mining sector; The need for future research in the mining sector from the exploration circle to the market is also one of the key parameters to help the mining economy flourish in the country. According to the forecast of demand in world markets in the next few years, the price of gold ore and non-ferrous metals and other precious metals will always have a continuous growth and the ground for the growth of demand for copper, etc. will be provided.

Our society today needs to develop and create jobs in which the mining industry can play a role as a driver in the country's economy.

It is noteworthy that the study of Iran's economic growth rate in a historical perspective shows that during the last 4 decades (from 58 to now), the average economic growth of Iran has been 1.98 percent, which unfortunately 12 years, or about one third Over the years, our country's economy has been facing a negative growth rate. In the period 1387 to 1398, the average economic growth rate was 2.85 percent, while in the last 20 years, the inflation rate in the country has been 18.34 percent.

According to expert studies, the world needs at least two years to return to pre-corona conditions, and this offers more opportunities than threats to our country; The opportunity to access new technology, the opportunity to transfer the management shares of large companies, especially in the mining sector, formed by the country's mining activists to the real private sector will be among the factors for the development of the mining industry in the country in the coming years. The future of our economy depends on the path we have taken so far, unless there is a change in structures through trends and behaviors or major events (such as war, disease epidemics, revolution, etc.). We do not know what will change the price of oil and currency, the results of Iran-US policies and the regional balance, but we can say that by 2035 the situation of the mining industry in the world will be in line with increasing demand for various commodities and so on. Intermediaries, we can figure out the country's mining industry with transparency of strategy and movement policy. Among the strategies that should be on the agenda of macro policy makers and the country's industry strategy in the next 5 years; Investing in non-profitable businesses, especially the mining industry:

A) The need to redesign and extract mines through the introduction of new technologies and technologies in this field with the aim of increasing productivity and the impact of digital developments on mining businesses with the aim of optimal use of this God-given wealth in the country.

B) The need to increase capital and strengthen the investment fund of the country's mining activities in the current situation up to a ceiling of $ 300 million with the aim of supporting and activating small and medium mines in the country.

C) The need to support and guide the focus of social responsibility of mining companies with the aim of eliminating poverty and job creation by looking at the country's mining law.

D) The need to focus on parts of the mining industry that have the potential to grow significantly. For example, it is true that the country's economic growth is expected to average 3%, but different sectors of the economy will perform quite differently.

The mining industry in mining countries is a major part of the world economy and a major investment hub and a key driver of growth for these countries. Given the steady jump in mineral raw material prices and increasing operational challenges over the past decade, we must strive for the future of the mining industry to create value and secure competitive advantage through strategic focus and operational excellence in the mining business and high levels of capital and resource productivity. Achieve this industry. In this regard, the need to implement a coherent management system, behavioral control and determination, transparency and certainty for the trust and entry of investors gives the investor the confidence to spend his capital in the mines and permanently and legally in unforeseen circumstances, government support. Has a support over its head as an umbrella. In the area of ​​challenging local dissidents, the clear suggestion in this area is that Iran, like Australia, has enacted laws to protect local labor and indigenous communities, protecting the cultural heritage of this section of society and requiring miners to create jobs and provide social incentives. To stand by the local community and not against them. But in the field of mineral transportation, since mining in the future should be considered the main source of economic growth and development of Iran, because Iran in terms of geology and geography, has favorable conditions for mining activities and a combination of attractive mineral resources with distances Short between extraction and processing sites and the consumer market inside and outside the country; The need for large-scale government investment in transportation infrastructure over the next 5 to 10 years will make Iran a viable option for mining processes; Therefore, our country's mining economy will be able to account for 10% of GDP in the next 5 years. Inevitably, continuous reforms in the framework of industry and mining and the creation of a safe and legal environment for investors will make the mining industry in Iran a strong and profitable industry for investors.

The need for continuous use and establishment of new technologies, especially technologies that intend to better care and benefit from the natural resources of our beloved country, will cause the mining sector to continue to develop in the coming years. The need to promote productivity promotion in water use and the development of alternative resources in the short and long term with the aim of optimizing water consumption and achieving higher levels of productivity, given the country's climatic conditions, should be considered. Encouraging the promotion and use of renewable energy and mining with unconventional energy is another matter. Due to the geographical location of mineral reserves and the appropriate sunlight in our country, we have a very good opportunity to provide energy for mining companies with 100% unconventional renewable resources (solar and wind power plants), and in this case the slogan of sustainable development in mines is a reality. It turns out that by observing these cases and creating effective compliance with environmental requirements in mining projects, we will easily remove one of the main obstacles for investors to enter the mining sector, which is the National Environmental Organization.

Mohammad Reza Bahraman / Mining Expert / Tasnim