Baku, Azerbaijan, Sept. 27
By Fatih Karimov– Trend:
Iran enjoys huge reserves of mineral and hydrocarbon resources that have made the country to an attractive market for foreign investors.
Proved oil reserves in Iran, according to its government, rank fourth largest in the world at approximately 158 billion barrels as of 2013. The country is also the world’s biggest gas reserve holder (33.5 trillion cubic meters, 18 percent total).
The Islamic Republic is among the 10 major mineral-rich countries. It possesses 7 percent of the world’s total mineral deposits with about 68 kinds of commercially valued minerals, including gold reserves. The volume of Iran’s minerals is estimated at 57 billion tons.
Such reserves present a unique opportunity for the country’s development, but they can also be seen as a negative factor, if the administration is encouraged to gain huge money through sell of raw materials.
In particular when the governments, confident with the billions of revenues through selling huge reserves, prefers to mobilize more supporters via populist money-draining policies such as giving social subsidies rather than directing the revenues to infrastructural, value-add projects.
We have witnessed this policy in the last decades in Iran, in particular under the populist president Mahmoud Ahmadinejad (2005-2013).
Lack of long-term planning and constructive cooperation with the world has made the economy of the Islamic Republic highly dependant to selling raw materials in particular hydrocarbon reserves.
A look at the list of Iran’s top exports indicates that raw materials share the dominant part of Iran’s non-oil export basket. Gas condensates, propane, butane and some other raw petroleum products - which Iran puts in the non-oil exports basket - made the country’s top exported goods during the first five months of current fiscal year(started March 20).
The existing table of exporting semi—processed goods however is contradicting with objectives of the current government’s economic policies. The government tries to benefit from the removal of the international sanctions, attracting foreign investments to form a more diverse and globally competitive economy and safeguard the economy against future shocks and restrictions.
However the country can make its raw material reserves an opportunity to attract foreign investors. Mining and mineral industries are suitable grounds for attraction of investment and Iran has defined some $30 billion worth of projects in mining and mineral industries such as steel, copper, aluminium and gold, according to local officials.
Foreign investors are also well-aware of the Iranian mineral market’s benefits. A visiting French official involved in plastic industry, who has attended the Iran Plast Exhibition in Tehran, described the abundant raw materials as the main reason behind the interest of the Europeans to cooperate with Iran in this sphere.
There is a painful but brilliant path ahead of the Iranian administration, to revise its regional policies, expand cooperation with the globe, to gain trust of the foreigners for investment, in order to revive the country’s sanction-hit economy.