Iran signs $1 billion deal to develop Mehdiabad zinc mine

Reuters– Iran has signed a $1 billion deal with private investors to develop Mehdiabad, one of the world’s largest zinc mines, which it expects to go on stream in the next four years and produce 800,000 tonnes of zinc concentrate per year.

The state-owned Iranian Mines and Mining Industries Development and Renovation Organisation (IMIDRO) said in a weekend statement it signed the deal with a consortium of six private companies, led by Iran’s Mobin Mining and Construction Company.

According to media reports, Mehdiabad has zinc ore grades of between 2 to 4 percent, meaning 800,000 tonnes of zinc conentrate a year would add between 16,000 to 32,000 tonnes of refined zinc to the 13.7 million tonne per year global market.

IMIDRO, a state-owned mines and metals holding company, said Mobin was talking to international mining firms in Switzerland and Spain about joint ventures to develop the Mehdiabad mine, located in Iran’s Yazd Province.

Iran has struggled to lure foreign investors since it signed a deal in 2015 with six world powers to curb its nuclear program in return for the lifting of international sanctions against it.

As recently as January, the United States voted to extend its sanctions against Tehran, the latest of several such post-nuclear deal moves that have deterred western banks from financing trade or investment in Iran.

“(Mehdiabad) is only significant if they get it off the ground. Usually they need foreign help and even then, to get an idea of what this means you need an idea of what the metal content in that concentrate is,” said Citi analyst David Wilson.

Mehdiabad, a zinc, lead and silver deposit, has 154 million tonnes of proven reserves, according to IMIDRO, which expects the reserves to reach up to 700 million once exploration is completed.

The private consortium will run the mine for 25 years, though their contract could be extended.

On top of the targeted 800,000 tonnes of zinc concentrate, Mehdiabad is also expected to produce 80,000 tonnes of lead and silver concentrate a year, IMIDRO said.

The Mehdiabad project has been under consideration since the 1990s but has faced multiple delays.

(Editing by Jason Neely/Ruth Pitchford)