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.

Israeli attack on Iranian ship Saviz indicates change in modus operandi

An Iranian vessel was attacked in the Red Sea as Iran and the West resumed nuclear talks in Vienna to revive the 2015 nuclear deal between Tehran and major world powers. Saudi and American media outlets claimed that Israel was behind the attack. The Saudi-owned Al Arabiya reported that an “Israeli commando” attached “a magnetic explosive device” to an Iranian vessel in the Red Sea.

The Tasnim news agency confirmed the attack and identified the vessel as “Iran Saviz.” It reported “The incident happened after the explosion of limpet mines attached to the hull of the ship.”

A day later, Iran officially commented on the issue. The Iranian Foreign Ministry issued a statement confirming the attack.

“The Iranian merchant ship Saviz sustained minor damage in the Red Sea off the coast of Djibouti on April 6, 2021, due to an explosion, the cause of which is being investigated,” Saeed Khatibzadeh, the Ministry’s spokesman said. 

He said the vessel has been deployed to the region in coordination with the International Maritime Organization (IMO) and it has been involved in ensuring maritime security. 

“As already officially announced and based on the arrangements made with the IMO, the non-military Saviz ship had been stationed in the Red Sea region and the Gulf of Aden in order to ensure maritime security along shipping lanes and to counter pirates,” explained the spokesman.

“The ship practically served as Iran’s logistical station (for technical support and logistics) in the Red Sea; so, the specifications and mission of this vessel had already been officially announced to the International Maritime Organization,” he added.

Iran didn’t point the finger at anyone. But, The New York Times suggested that Israel was behind the attack. “The Israelis had notified the United States that its forces had struck the vessel,” the American newspaper quoted a US official as saying.

Although, the official said that the Israelis had termed the attack ‘retaliation’ for alleged earlier Iranian strikes on Israeli vessels, but the timing of the attack strongly indicated a link between the resumption of nuclear talks in Vienna and Israeli efforts to derail those talks.

The Times implicitly pointed to this link, saying the attack came as progress was reported on the first day of the Vienna talks, which are aimed to revive the 2015 Iran nuclear deal, officially known as the Joint Comprehensive Plan of Action (JCPOA) - the very deal that Israel has been working hard to sabotage since 2015.

Therefore, Israel may have intended to send a message to the Biden administration that it will do whatever it can to prevent a revival of the JCPOA. Israel’s modus operandi in the latest attack also suggests a change in Israel’s approach. Israel has reportedly been involved in a shadowy naval war with Iran in recent years.

Several Western news media reported that Israel has been attacking Iranian vessels carrying oil and other commodities since 2019 in a bid to spoil Iran’s economic ties with other countries. These attacks mostly went unnoticed and Israel refused to publicize them until most recently. 

The Israelis would often attack Iranian commercial ships deep into the night using helicopters equipped with machine guns from a distance of many kilometers, a source familiar with the matter told the Tehran Times. 

The Israeli attacks were more of a harassment nature than an operation meant to inflict real damage, according to the source. 

The attack on the Saviz, however, indicates a new modus operandi. First, it was reportedly done with a limpet mine attached to the hull of the Iranian vessel by an Israeli commando. Second, it was carried out early in the morning, a clear indication that the attacker wanted it to be publicized. Leaking the news of the attack to Al Arabiya and The New York Times left little doubt about the intention of the attacker. 

Israel seems to be busy working to prevent the US from returning to its commitments under the JCPOA. If the US is willing to revive the nuclear deal then it needs to pay more attention to Israeli machinations. 

India acquiring strength to monitor movement of Chinese vessels in Malacca Strait

The grant issued by the Japanese government just could not go unnoticed by the stakeholders of Indo-Pacific. The US$36 million in aid to install a battery energy storage system on India's Andaman and Nicobar Islands ‑ Japan's first-ever grant to the strategically located islands ‑ is much more than clean energy. 

Sitting at the mouth of the Malacca Strait, arguably the most important chokepoint in the world, the islands give India and its friends a front-row view of Chinese vessels going into and out of the narrow waterway.

On 26^th March, Japanese Ambassador Satoshi Suzuki and C. S. Mohapatra, an Additional Secretary at India's Ministry of Finance, exchanged notes in New Delhi concerning grant/aid of US$36 million to install a battery energy storage system at the Phoenix Bay Power House on the island of South Andaman to utilize renewable energy and stabilize energy supply.

"It contributes to our shared vision for a free and open Indo-Pacific, and also contributes to Prime Minister Yoshihide Suga's goal of offering climate change assistance," the official said.

"The real advantage the Andamans provide to India is the ability to conduct surveillance over critical waters," said Darshana Baruah, an associate fellow with the South Asia Program at the Carnegie Endowment for International Peace.

"The islands offer unparalleled advantage in surveillance and monitoring the Malacca Strait. It is also close to the Straits of Indonesia, the alternate route into the Indian Ocean, especially for submarines," she said.

"A coherent monitoring and response mechanism will help India detect Chinese vessels upon their entry into the Indian Ocean."

But to maximize their potential, and to host more personnel on the islands, they will need to develop infrastructure, including water, electricity, housing and internet access. "The Japanese grant addresses a key requirement on the ground that will help India better utilize the strategic potential of the Andaman and Nicobar," Baruah said.

Tanvi Madan, a senior fellow and director of The India Project at the Brookings Institution, noted that while the power grid funded by the grant contributes to civilian infrastructure, "it serves a dual purpose."

Madan said that the grant comes at a time when India is stitching in Andaman and Nicobar into its strategic tapestry in a much more significant way and reflects a change in attitude on both the Indian and Japanese sides.

India was the first country Japan extended official development assistance to in 1958. But India has always been reluctant to bring external actors into the Indian Ocean. Japan, for its part, has been hesitant to be too active in India's strategic periphery, to avoid being unnecessarily provocative to China, Madan said.

On India's side, two things are clear, Madan said. One, there is recognition that China, including through its navy, will be increasingly active in the Indian Ocean region. Second, because India cannot tackle that growing presence on its own, "you have now seen a broader switch in Indian strategy that has involved both developing its own capabilities and welcoming other external actors."

China has been boosting its presence in the Indian Ocean, opening its first overseas military base in Djibouti and building a series of commercial ports in Myanmar, Pakistan, Sri Lanka, and the Maldives that could eventually serve a military purpose.

India to begin full scale operations at Iranian port Chabahar in May 2021

India is getting ready to begin full-scale operations of its first foreign sea port venture Chabahar in Iran by May end this year. This facility located on the Gulf of Oman aims at facilitating South Asia, Central Asia and West Asia trade.

Indian US$500 million investment represents a clear and potent commercial challenge to China’s massive port investment in Gwadar port located in Pakistan, a key component of Beijing’s Belt and Road Initiative (BRI).

According to a report by Asia Times, India has nearly completed development of two terminals at Chahabar’s Shahid Beheshti complex that opens onto the Gulf of Oman.

The 10-year lease agreement, a deal first clinched by Prime Minister Narendra Modi in Tehran in 2016, has until now been hobbled by US sanctions imposed under the Donald Trump administration.  

Indian suppliers and engineers, some with interests in the US, were reluctant to deliver essential machinery and services to Iran on fears they could face sanctions, despite clear exemptions on Chabahar in Trump’s sanction order. That led to certain speculation that China may take over the project from India.

Now, New Delhi has accelerated the project with the shift from Trump to Joe Biden, banking like others on a new breakthrough on the Joint Comprehensive Plan of Action (JCPOA) and a broader US-Iran warming trend.

“I will inaugurate the fully operationalized Chabahar port in April or May,” Mansukh Mandaviya, Indian Ports & Shipping Minister, said in a recent virtual discussion on Iran’s Chabahar port.

India has supplied two large cargo-moving cranes and will deliver two more in the coming weeks before the facility’s expected ceremonial opening next month.

New Delhi is already promoting the port’s potential humanitarian role, noting it was used to send emergency shipments of wheat to Afghanistan during the COVID-19 crisis and pesticide to Iran to deal with a recent locust infestation.

Chabahar has seen limited operations since 2019 due to the US restrictions imposed on Iran’s energy exports. The port handled a mere 123 vessels with 1.8 million tons of bulk and general cargo from February 2019 to January 2021, well below its operating capacity, according to reports.

New Delhi ultimately aims to link Chabahar to its International North-South Transport Corridor (INSTC), a project initially proposed by India, Russia, and Iran in 2000 and later joined by 10 other Central Asian nations.

Some see the INSTC as a less talked about rival to China’s BRI, which has invested heavily in Pakistan’s road, power and trade infrastructure, including huge multi-billion-dollar investments at Gwadar port.

INSTC envisions a 7,200 kilometer-long, multimode network comprised of shipping, rail, and road links connecting India’s Mumbai with Europe via Moscow and Central Asia. Initial estimates suggest INSTC could cut current carriage costs by about 30% and travel times by half.

Iran has already started working on a 600-kilometer-long railway line connecting Chabahar port to Zahedan, the provincial capital of Sistan-Baluchestan province close to the Afghan border.

Chabahar port consists of Shahid Kalantari and Shahid Beheshti terminals, each of which has five berth facilities. The port is located in Iran’s Sistan-Balouchestan Province and is about 120 kilometers southwest of Pakistan’s Baluchistan province, where the China-funded Gwadar port is situated.

In May 2016, India, Iran, and Afghanistan signed a trilateral agreement for the strategically-located Chabahar to give New Delhi access to Kabul and Central Asia.

The original plan committed at least US$21 billion for Chabahar–Hajigak corridor, which included US$85 million for Chabahar port development, a US$150 million credit line for Iran, an US$8 billion India-Iran MOU for Indian industrial investment in a Chabahar special economic zone, and US$11 billion for the Hajigak iron and steel mining project awarded to seven Indian companies in central Afghanistan.

Hajigak is the best known and largest iron oxide deposit in Afghanistan. It is located near the Hajigak Pass, with its area divided between Maidan Wardak and Bamyan provinces.

Unlike Chabahar, which is designed more to serve the economic and trade interests of the wider region, Gwadar is more tilted toward Beijing’s ambitions, analysts and traders say.

Riaz Haq, founder and president of PakAlumni Worldwide wrote in a recent blog that “China is looking to build and use Gwadar in Pakistan as Hong Kong West to serve as a superhighway for China’s trade expansion in [the] Middle East (West Asia), Africa and Europe.”

Gwadar port’s planned capacity will accommodate a massive 300 to 400 million tons of cargo annually, comparable to the combined annual capacity of all Indian ports. It also dwarfs the 10-12 million tons of cargo handling capacity now planned for Chabahar.

In another comparison, the largest US port at Long Beach, California, handles 80 million tons of cargo, about a quarter of what Gwadar could handle upon completion of a project that is designed largely to receive and move China’s trade.