Iran is one of the most important mineral producers in the world, ranked among 15 major mineral-rich countries. The most important mines in Iran include coal, metallic minerals, sand and gravel, chemical minerals and salt. Other large deposits which mostly remain underdeveloped are zinc (world’s largest), copper (world’s 9th largest), iron (world’s 12th largest), uranium (world’s 10th largest) and lead (world’s 11th largest). Iran with roughly 1% of the world’s population holds more than 7% of the world’s total mineral reserves.
So, Iran is a welcoming country to host business regarding mine and minerals. In this newsletter we want to give some information about the legal frame of mining industry in Iran.
Iranian Legal Regime regarding Mining
Iran’s Mining Act 1998 revised in 2001 regulate the mining industry in Iran. In this act, legislator seeks to eliminate defects and blank points and further expand exploration and exploitation in the mining sector, development and processing of minerals, supply raw material to factories, replace foreign raw material and half-manufactured goods with domestic ones, remove obstacles, establish facilities for participation of non-governmental mining works and ensure active public participation to rid the country of a single product economy. In other words, this act has been the result of government decision to formulate a comprehensive mining law and preparing a legal structure for different aspects of Mining industry in Iran. The main subjects addressed in this act are as follows:
- Categories of mineral substances
- Regulations on exploration of minerals
- Regulations on exploitation of minerals
- Penalties regarding the unauthorized mining
- The role of executive agencies of government
- Promotion of investment in mining
- Improvement of Foreign investment
- Protection of mining reserves
- Issuing permits for mining operations
- Supervision of mining works
- Preparing grounds for mining activities
- Achieving value added in mining raw material
- Promoting mining material with value added
- Providing employment opportunities in the mining sector
- Increasing the role of mining sector in economic and social
According to this act, natural or legal persons, Iranian or foreigners, reserving the governmental rights, could do business in the mining industry. The special features of the Iranian mining act are as below:
- Guaranteeing proven mining reserves as acceptable security
- Increasing the term of exploitation from 6 years to 35 years by offering priority to owners of exploitation licenses which possess official and negotiable instruments or title deeds.
- Encouraging and supporting the Ministry of Industry, Mines and Trade in the extraction and processing of minerals for export and generation of value added
- Organizing and making optimum use of services for mining experts and geologists
- Eliminating regulations that impose unnecessary and overhead expenses for production of material in order to create stability in the calculation of the economics of production of mining products
- Establishing a capital investment fund for mining activities in order to compensate all or a part of financial losses incurred by exploiters and extractors of minerals
- Preventing the destruction and waste of mineral reserves
As a general view, the revised mining act is to seek how can make it easier for Iranian investors or foreign companies to invest in this industry. The main approach of the legislation has been settled to make mining industry attractive to be invested. Other than mining act, it must be noted that other laws acted by parliament or executive bodies of Iran government has been predicted auxiliary facilities for mining industry.
The most important legislation passed by Iranian parliament is Foreign Investment Promotion and Protection Act (FIPPA). This act involves some important protective measures for foreign investors such as: equal rights for foreign investors same as Iranian investors, mechanism to guarantee foreign investment, financing, dispute resolution for foreign investments, prohibition of imposing double tax for foreign investors and so on.
Furthermore, Iranian government has created special territories for investment; Free commercial and industrial zones. In these zones special privileges has been predicted for investors, Iranian or foreign. Creating these zones, made Iran as one of the first countries in the region to welcome foreign investment and predict special high-valued promotion and protection for foreigner investors.
As the last point on Iranian legal regime according to mining, it must be noted that the state-owned company “Iranian Mines and Mining Industries Development and Renovation Organization” (IMIDRO) is the main company of Iran regarding mining. IMDIRO’s main responsibility is to steer the development of the mining industries sector and convert its resources and products to sustainable wealth for the country.
The future of mining industry and law in Iran
Iranian mining industry is still under development. Many factors have contributed to this, namely lack of suitable infrastructure, legal barriers, exploration difficulties, and government control.
However, in the recent years there have been taken important steps to make it easier for foreign companies to run a mining-related business in Iran and this approach has been sought by Iranian parliament and other governmental bodies.
In collaboration with Lupicinio Rodríguez Jiménez
Lupicinio International Law Firm
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