Faced with iron sales slump, gov't postpones export tax.
Faced with plunging iron ore exports due to heavy competition, Iran has decided to put off the export tax it had originally planned to impose starting next month.
A 31 percent fall in iron ore prices this year, stoked by increased shipments from major suppliers Australia and Brazil, has led to a six-fold jump in stockpiles at Iranian ports as exporters held off sales, leading to the closure of around half the private mines at one stage.
"The government has agreed to postpone the tax to the beginning of next [Persian] year because right now the market is too low and they're afraid to lose the market when they apply this duty," an industry source told Reuters.
The plan was to impose a 10 percent export tax this year and gradually increase it to 20 percent, said the source, who owns one of the iron ore mines in Iran that has been temporarily shuttered.
Iran already imposes a 40 percent tax on exports of iron ore concentrates and a 30 percent duty on pellets but none on iron ore itself.
Iron ore is the country's biggest non-oil export.
Nearly all of Iran's iron ore shipments go to China, which bought $2.4 billion worth in 2013, based on Chinese customs data. Iran is the fourth-biggest iron ore exporter to China, the world's top market, although Iranian shipments are well below those of Australia and Brazil.
Iron ore prices dropped to $89 a ton in June, the lowest since September 2012, although they have since bounced back and stood at $93 last week.
The recovery has encouraged some of the private mines in Iran to reopen, although total exports in July were only 1.065 million tons, according to the source. That would be well below the 1.2 million tons shipped in June, already the lowest since September 2012.
Given the global supply situation, any sustained recovery in the price looks unlikely in the medium term, Reuters said.
Top mining companies, such as Rio Tinto and Vale, are boosting output, and that tends to edge out smaller players with higher costs such as those in Iran.
DIGGING -- This is the giant open pit iron ore mine at Bafq, which was recently plagued by a series of strikes by the miners.
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|Title Annotation:||Economy: Money and its impact|
|Publication:||Iran Times International (Washington, DC)|
|Date:||Sep 19, 2014|
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