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Iran is one of the five countries of the world with the largest reserves of natural stone. Quarries exist in different areas of the country, the most important being in the provinces of Azerbaijan, Khordestan, Hamedan and Lorestan.
Unlike the majority of Iranian economic sectors, quarries and stone treatment plants are the property of private companies.
There are three types of company:
- Quarries without a factory (approx. 1,000).
- Factories without their own quarry: approx. 4,000, of which some 400 use modern technology. Their production is usually targeted at the export market.
- Quarries with factory (approx. 500): these companies spearhead the Iranian industry in this sector. Most of these companies exhibit an advanced technological development. Their production is usually for the export market. If they do not posses sufficient processing capacity, they sell the excess excavated mineral to factories which do not have their own quarry.
Exports
Each year, as local companies acquire technology, Iranian export capacity increases. However, due to the relative scarcity of appropriate machinery, the country鈥檚 full potential is not reached.
In 2003, Iranian exports of natural stone reached a value of almost 77 million dollars. Most important are the untreated and rough-hewn marbles and travertine with a value of 20 million dollars exported in 2003, and treated marble, travertine and alabaster with their manufactured products (39 million dollars).
The main destinations for exports are countries of the region: Kuwait, United Arab Emirates, Iraq, Saudi Arabia, etc. The Emirates deserve a special mention as most of the exports to that country are due to the presence in Dubai of Iranian companies who use its port for the export of their products to Europe and North America.
Italy stands out among European destinations as being the country best established within the sector. Part of the product exported to Italy is used to pay for machinery sold in the country. On arrival in Italy, a considerable part is re-exported to other countries as if it were an Italian product.
Another country with a strong presence in the Iranian market is China, whose imports have increased dramatically in the last few years.
Importation of machinery
Imports of machinery for natural stone industry reached almost 125 million dollars in 2003.
The machinery sector is dominated by Italian companies. However, we should distinguish between machinery used for the extraction of the mineral and that for its transformation. Italy is not the leader in exports of extraction machinery to Iran.
During the year 2002, companies within the mining sector made a great effort to buy mining machinery (for use in all sectors of mining) with a total of 220 million dollars spent on imports, of which South Korea supplied 169 million dollars worth of machinery. Imports of this type of machinery actually fell in the following year to just 75 million dollars. This phenomenon is common in Iran, as in a given year the government of the country will evaluate the necessities of a sector and invest in its technological development.
However, the imports of natural stone transformation machinery have maintained their levels, with an increase of 18% from the year 2002 to 2003. Italian companies do dominate the sector for this type of machinery.
Distribution channels
From the point of view of exporting to Iran, the critical factor to enable our introduction within the country is in the choice of an adequate business partner or agent. Other factors that might give us the edge over the competition are our after sales service, and long term payment facilities.
Market penetration strategies
The best way to penetrate the Iranian marble and natural stone industry is through the sale of machinery and investment. A large number of Iranian companies within the sector are interested in obtaining foreign investment.
Thus, a cooperation agreement with a local company in which a mixed holding company at 51% / 49% could be created. Through this company a 5-8 year contract with the owners of the local quarries can be negotiated where the supply of machinery, know-how and/or management, is exchanged for the final product.
Foreign companies are still not heavily introduced within this sector in Iran, although the Italians are present as buyers of untreated and treated stone products, as suppliers of machinery, and as quarry owners through mixed companies with local firms.
Tariff Barriers and other taxes
Regarding tariff policies, the Islamic Republic of Iran imposes two import duties. On the one hand there is the Unified Tariff of 4%, to which one must add the so called Commercial Benefit Tax (IBC). In practice, the IBC is relatively high only for products that are produced locally, but is not high in comparison with other sectors. Both taxes, IBC and the Unified Tariff, are calculated on CIF values of the products in Riales at the official rate of exchange. For natural stone products (treated and untreated) the IBC is at 21%, except for sub-section 251611, which is at 11%
Conclusions
In the Iranian natural stone sector there are good opportunities for the acquisition of untreated material (for subsequent treatment) and treated products, due to Iran鈥檚 low production costs. However, most opportunities exist in the supply of machinery both for the extraction and /or the treatment of the stone.
Summary of the market analysis: 鈥淧iedra natural y su maquinaria en Ir谩n鈥� (Natural Stone and its machinery in Iran), by Vicente Balibrea Fern谩ndez (Spanish Office of Economics and Commerce in Tehran, belonging to the Instituto Español de Comercio Exterior 鈥� ICEX)
[i]鏂囧瓧[/i]
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