Can Iran become a new hub of copper?

In this blog, I am talking about an important base metal, copper. Many of the readers may be aware that copper mines around the world are facing closure due to one or the other reason. As a result prices of this important industrial metal are going up in the global markets.

Industries using copper are desperately looking for alternative sources of supply. My today’s blog has been inspired after reading a report about discovery of huge copper reserves in Iran, Pakistan’s next door neighbor.

Managing Director of National Iranian Copper Industries Company (NICIC) has announced the discovery of one billion tons of new copper reserves in Iran.

NICIC carried out deep drilling to identify new copper reserves across the country, which resulted in the discovery of one billion tons of new reserves, Ardeshir Sa'd-Mohammadi said in a press conference. He put the value of the discovered reserves at about US$8.3 billion.

The official put the country’s total copper reserves at 40 billion tons, saying that Iran currently has the world’s seventh-largest copper reserves, and hopefully the country will climb to sixth place shortly.

Sa’d-Mohammadi further mentioned the new record achieved in the country’s copper cathode production and noted that over 280,000 tons of the commodity were produced in the country during the previous year which was 12 percent more than the preceding year.

Pointing to the NICIC’s new projects for the current year, the official noted that three major copper-related projects will go operational in the current year which is going to add more than 400,000 tons to the country’s copper concentrate output, boosting the company’s annual incomes by US$800 million.

He further noted that the country’s copper exports increased in the previous year despite the negative impacts of the coronavirus pandemic and the US sanctions.

Pakistan Refinery should not be allowed to import second hand refinery

It is worth noting that Pakistan Refinery Limited (PRL) intends to buy a second-hand refinery to upgrade its operations and increase output to meet rising demand of POL in the country. 

PRL has placed an advertisement to purchase a second-hand refinery complex for relocation to Pakistan. Offers from interested bidders have been invited with a closing date of April 23, 2021.

Please allow me to say that this entire episode seems a dubious attempt, simply looking at the closing date and the rational provided. It is right that PRL may succeed in doubling its capacity to 100,000 bpd, but the unit/units being imported will be outdated and/or obsolete. Another limiting factor is that PRL will be able execute plan for upgrading and expanding Euro V specification and high speed diesel oil production.

The report highlights two important points: 1) Pakistan’s total refining capacity is 19.37 million tons per year, while the country consumes 19.68 million tons of petroleum products annually and 2) the Government of Pakistan (GoP) says refining capacity is not being fully utilized on account of financial as well as technical problems, and is supplying only 11.59 million tons per year, while the remaining demand is met through imports.

The Finance Ministry, in a report released in March 2021 said that import volume of crude increased by 13.8% during the first eight months of FY21. Import volumes of petroleum products increased by 27.7% in the same period.

Reportedly, the GoP has finalized a new policy for petroleum refining, aimed at offering incentives for setting up of deep conversion refineries. Therefore, PRL project may not qualify for the incentives stipulated in the Policy.

It seems an attempt is being made to reward the favorites by stating that the incentives would also be available to the existing refineries for upgrading and modernizing their facilities. There would be no restriction on technology, equipment or process to qualify for such upgrade provided that it results in motor gasoline and diesel production to meet specifications notified by the government.

To conclude, it may be sufficient to advise the GoP not to allow Pakistan Refinery to import secondhand machinery and obsolete technology. I also invite the experts and potential investors in refineries to explore the reasons behind half a dozen foreign investors bidding farewell to Pakistan in last one decade.

Why to blame Saudi Arabia for coup in Jordan?

Reportedly, Shaker Zalloum, a Palestinian author believes that Saudi Arabia and the UAE had a key role in the coup attempt in Jordan. He has been quoted saying, “In the official statement of the Jordanian government, there is a reference to the intervention of foreign intelligence without specifying them.”

He went to the extent of saying, “I think it is most likely a coup attempt behind which Saudi Arabia and the UAE played a key role.”

Zalloum talked about two persons Bassem Awadallah, one of the advisers of Mohammed bin Salman and Sharif Hassan bin Zaid a Jordanian citizen who also holds Saudi citizenship. In the same breath he termed Bassem Awadallah, as one of the leaders of corruption in Jordan and the region.

Talking about attitude of Saudi Arabia and Bahrain towards the Palestinian cause, he said, “The following of subordination policy of the American-Zionist camp has become obvious even to the simple Arab citizen in Jordan and in most Arab countries. What happened under normalization of ties with Israel, reveals the malicious nature of the plan.”

He also gave a strange narrative, “These independent regimes were established according to specific job tasks to serve the colonial West and the Zionist ambitions in Palestine. When Britain declared its Hebrew Kingdom of Saudi Arabia in 1932, Churchill wired to Chaim Weizmann congratulating him on the accomplishment of half of the promised state of Israel. As for the delusive independence for the rest of the Persian Gulf states, it came in the same context.”

As regards Bahrain and UAE he said, “Indeed, their cooperation with the Zionists is old, and what has appeared to the public in terms of recent normalization of ties does not go beyond the precedent illegitimate relationships. These regimes claim advocating Arabs and Islam, while they are neither Muslim nor Arab.”

After going through interview of Shaker Zalloum, my only concern is that it aims at maligning Saudi Arabia and other Gulf States. He has not made any reference to reports that alleged involvement of one of Mossad agents in the coup.  

Lifting US sanctions on Iran not an easy job

The most complicated issue in the United States-Iran relationship is the intertwined US sanctions, which were aimed at punishing the Islamic Republic on multiple counts and in the worst possible manner. 

These include from activities related to the nuclear program and support of terrorism to missile proliferation and human rights abuses. Some of Iran’s major institutions, including the Central Bank Iran, were sanctioned, both for their roles supporting the nuclear program and for aiding the alleged terrorist attacks by proxy militias.

The Biden administration wants to lift the sanctions related to Iran’s nuclear program – as promised in the 2015 deal – if Tehran, in turn, rolls back recent breaches of the nuclear deal. The complicating factor in current and future diplomacy is that key Iranian institutions and individuals could remain sanctioned for secondary reasons, thus not providing Iran the economic relief it seeks.

Iran’s oil industry, the country’s main source of export revenue, is a prime example. Biden could lift sanctions on NIOC for its role in funding programs on weapons of mass destruction. But it would remain sanctioned for financially facilitating terrorism orchestrated by the Revolutionary Guards. The same problem of overlapping sanctions could arise in any future talks about Iran’s missile program because institutions involved in proliferation are also sanctioned for supporting regional terrorism.

The Biden administration has the authority to provide temporary exemption from sanctions; it would keep sanctions in place legally but nullify their effects until the Treasury formally revokes sanctions. “Iran is unlikely to be satisfied with such an approach and could demand formal removal of counter terrorism sanctions on these entities, a move that would be hugely unpopular in US domestic circles,” Brian O'Toole wrote for the Atlantic Council.

The issue of sanctions was further complicated when President Donald Trump abandoned the nuclear deal—brokered by the world’s six major powers over two years of intense diplomacy—in 2018. He then re-imposed earlier sanctions from the Bush and Obama administrations that had been lifted when the Joint Comprehensive Plan of Action (JCPOA) was implemented in 2016. He also took the unusual step of sanctioning Iran’s banking and oil sectors for funding the Revolutionary Guards and extremist proxies across the Middle East.

On April 2, Iran has begun indirect talks in Vienna with the United States on returning to compliance with the JCPOA. The Iranian delegation included representatives from the Central Bank of Iran and the Petroleum Ministry, which reflected Tehran’s interest in sanctions relief.

Therefore, there is an urgent need to assess the sanction imposed on Central Bank of Iran, National Iranian Oil Company, National Iranian Tanker Company, National Petrochemical Company, Islamic Republic of Iran Shipping Lines and 18 commercial banks. The filth of more than four decades can’t be cleaned in a few days or months.