Doing business in a post-sanctions Iran will not be
straightforward for the mining sector or any of its associated
service industries and may take longer than many anticipate,
delegates at the Post-Sanctions Iran International Business
Conference in London heard in December.
Speaking at the event, Dr Hans-Jakob Schindler, a former
special advisor to the German ambassador to Iran, sought to
dispel the myth that the international community’s
approval in July of the joint comprehensive plan of action
(JPCOA) for Iran to wind down its nuclear activities had fired
the starting gun on new business opportunities in the Middle
"People have talked about implementation [of JPCOA]
happening quite quickly," Schindler said. He pointed out that
the removal of sanctions was contingent on Iran eliminating
some of its enriched uranium, reducing its stockpiles of the
material and the number of centrifuges it operates. Such
removal of nuclear capacity is not generally achieved rapidly,
As well as being a large potential new market for raw
materials and mining equipment, Iran could also be a major
supplier of industrial minerals. Recent reports from local news
agencies suggest that the country hosts an estimated 60bn
tonnes of mineral reserves and already has 7,000 exploration
licences in issue.
The Iranian construction industry and the modernisation of
the country’s steel and oil and gas sectors are
also being eyed greedily by international operators, however
attendees at the Post-Sanctions meeting heard that the
terms for trading with Iran are likely to remain highly
prescriptive for some time.
Owing to the bilateral sanctions in place between the US and
Iran, companies with even tenuous US connections will also be
prohibited from securing contracts in Iran until further
notice, Schindler said. "If even one member of your board has a
Green Card [which gives the right to permanent residency in the
US], your company will not be able to work on a project in
Iran," he warned.
Deals transacted in US dollars would also contravene current
legal restrictions, Schindler added.
He also noted that while Iran is a stable country, it is in
a geographically unenviable position, sandwiched between
Afghanistan to the east – which is "not in very good
shape", according to Schindler – and Iraq to the west
– which is "not in a very comfortable position". This
increases the security risk for companies looking to operate in
A qualified opportunity
While acknowledging the many challenges facing businesses
looking to access Iran, Chris Robertson, global chief economist
at Russia-headquartered Renaissance Capital Partners, was more
positive about the opportunities the lifting of Iranian
"This is the biggest economy like this that’s
going to up again, ever," he said. He admitted that much
Iranian enterprise is currently government regulated and that
the private sector is fairly nascent, however he said there was
plenty of scope for manufacturers and service providers to take
their products to what is likely to be a receptive new
Chris Parker, CEO of UK-registered Iran Business Hub, said
that "over-caution" by financial institutions could scupper
early efforts to establish businesses in Iran, but stressed
that commercial ventures had to be pursued legally and
"It’s a huge opportunity, we all know that. But
we can’t get it wrong. The country
can’t get it wrong," Parker stressed. "It will be
a bumpy ride for the first six months at least."
Robertson agreed, saying that he did not see British banks
being "very quick" to finance business ventures in Iran,
however Chinese, Turkish and UAE-based banks are expected to be
Michael Tockuss, managing director of Germany-based
Deuts-che-Iranische Handelskammer eV (DIHKEV), said that nobody
is expecting the world’s big banks to start doing
business with Iran soon after sanctions are lifted, but some
Iranian banks could soon start to operate within the EU.
Parker predicted that "the battle of Starbucks is about to
happen in Iran", referring to the raft of global brands poised
to pour themselves into the sector, although Daniel
Khazeni-Rad, operator of Tehran-based Twitter feed, Bazaar
Business, pointed out that US brands would be out of the
"Any mention of American brands operating in Tehran is just
dead in the water," he told IM, pointing to
recent failed efforts by US fast food chains KFC and Pizza Hut
to establish restaurants in Iran.
German businesses already have a foothold in Iran, according
to Tockuss, thanks to Germany’s consistent
presence in the country throughout the sanction period, and to
local respect for German engineering.
Logistical capacity is crucial to enabling many companies to
operate in Iran, particularly the mining industry, which relies
on shipments of raw materials to and from mining sites as well
as imports of machinery for mine plants.
Masab Janoudi, CEO of London-based Amiri Logistics, said
that his company considered Iran to be a considerable
opportunity for providers of transport capacity.
"We already have a presence there through agents –
we have more logistics business there than most UK logistics
operators and already do a lot of work in the Middle East," he
Janoudi said that bulk raw materials shipping was not
currently a major business line for Amiri but that its
operations in this area could expand if the Iranian opportunity
required, however a larger and more lucrative business is
shipping machinery and spare parts for engineering projects.
Demand for this service could grow if mining takes off, he
Janoudi also said that existing port infrastructure was
"quite good", although shipping turnarounds tended to take "a
bit longer" there than in other places.
Sanctions remain a bottleneck for logistics, however.
According to Nigel Kushner, director of the British-Iranian
chamber of commerce, US-headquartered Tidewater Inc., which
operates ports in Iran, remains on an asset-freeze blacklist
even as sanctions look likely to be lifted, which complicates
shipping to Iran.