The banks apparently behave like this, but according to mining rules the banks have to grant loans in exchange for the mining licenses as securities, but this rule is apparently not being followed anywhere. According to mining experts, in order for the small mines to grow, the most important way to grant facilities is to put the mining license in the banks as the security. In this way the miners would not have to put property deeds, bank deposits or any other thing as securities. The Ministry of Industry, Mine and Trade had an interview with Farid Dehghani, the CEO of the Mining Investment Insurance Corporation, about this.
What does the Mining Investment Insurance Corporation do?
According to s. 31 of the mining law, the Mining Investment Insurance Corporation was created to support small mines and the private section. At the beginning our purpose was to just cover the discovery risks, and it was because investing in discovery is very risky and the private section does not normally go after it. Considering the fact that the mine’s development starts from discovery and it is the first stage of the Mining and Mining Industry’s development, the government created this corporation to cover the risks of discovery, but today we do more than that and pay a good attention to the miners’ needs.
One of the miners’ problems is that the banks do not accept their mining licenses as securities. What facilities has the corporation considered for these miners?
We have decided to facilitate the miners and processors’ access to bank sources. We enter the field when the banks do not accept the mining licenses, and all the miners’ possession in the private section are the license and the machinery which is located in the mining site. In order to solve this problem we start with analyzing the development or the processing project, and then give credit insurance policies or letter of guarantee to the banks. We take the mining license as the mortgage security, and so banks have nothing to do with the miners anymore. The bank accepted the technical and economic reports and the pro forma invoices we prepare and confirm. In a way we take responsibility for all the affairs related to bank facilities and the miners wouldn’t have to deal with it anymore. Of course we want the miners to take into consideration the credit and financial affairs and bounced checks which are rules passed by the Money and Credit Council of the Central Bank of Iran. This is how the corporation facilitates the miners’ access to bank facilities.
What is the reason behind the banks not accepting the mining licenses as securities?
The Law clearly says that the banks have to accept the mining licenses as securities, but banks do not accept them for legal reasons. Legally speaking, the banks may have their own reasons which are not acceptable to miners. For example, one of the legal reasons for banks is that according to banking laws, whatever is put as security should remain exactly as the same amount. That is why a property deed is acceptable for them, because a land stays a land with the same area, but when one puts a mining license as a deed, if the mine starts working the minerals would get less and less every day, and so it is not acceptable for the banks. There are other reasons too which are logical for the banks, but we have to consider that banks are financial mediums and they act only between the depositors and the people who want facilities and their sources are not actually theirs, so the priority for them is the profit and the reduction of risks, as much as possible. That is why our corporation has become a medium between banks and miners. The Mining Supreme Council has given us the permission to carry this out as a governmental section.
One of the miners’ problems is to accept the risk of discovery and processing. How does the corporation help with that?
We can manage that too. We inform the miner and the processor that we can cover their business cycle. So we take the risk from them and now we are responsible for it. For example if someone has invested 100 million Tomans in discovery but has not found any ore, the corporation will return 80% of the investment. If one finds a discovery area and ore, but does not find any specific mineral in the first stage, we get hold of the area and return their money. In other aspects, if someone ask for help for the discovery, or credit or technical help, with the help of the mining vice of the Ministry of Industry, Mine and Trade managing the retained earnings, the corporation enters and does all the process of credit and investment insurance policies. We do risk management for processing too, depending on the product and trade cycles it can affect in the market. If someone wants to run a processing unit, they have to present us with their processing project. Then they have to prepare only 30% of the money, and the other 70% would be bank facilities covered with our insurance policy. They have to come to us because the bank will not accept the project execution area as security, but we do, both the mine and the project execution area, and we’ll give insurance and they can get the facilities.
What are the conditions for requesting miners to get the facilities?
Whatever is needed for the discovery, extraction and processing insurance policies is now on Iranmico’s website. All the miners can go to the website and get whatever information they need, considering that our conditions are fair and considerably easy. We have accelerated this for them. All the services are now online and the miners do not need to go all the way to Tehran anymore. We have a ‘corporation’s desk’ in every province and the Provinces’ Engineering Organizations authorize them. We have our own branches in Provinces like Yazd, West Azerbaijan and Khorasan-E-Razavi. Each Province covers five other Provinces around it. For example, in order to reduce the risk of discovery, one should buy an insurance policy from us, present their discovery project, and give us data step by step, and so the risk would be reduced. At the end, if they didn’t find any ore, we’ll act according to the contract. The price would also be different, depending on the price of the insurance policy, and it would be 1.5 to 3% of the whole capital investment. The price is different for different minerals, and all the information and details regarding this can be found on the website.
Your corporation started in 2001, why is it not recognized among the miners yet?
Unfortunately the miners are not that much familiar with our corporation, and we didn’t get any feedback either when we asked them about it. So we came to the conclusion that we have to inform them about this corporation. So we held a lot of conferences and educational workshops. Another reason behind the miners not knowing us is that the corporation was very small when it was created 18 years ago. The whole capital was only 10 billion Tomans, which probably was good enough back then, but it stayed that way for 12 years. The 9th and 10th government did not consider any budget for us. It was only in the 11th government in 2013 that our capital reached 110 billion Tomans, and it has increased up to 143 billion Tomans this year. With the management efforts of IMIDRO and other colleagues we are trying to reach 350 billion Tomans by the end of this year, because with a small capacity in mines there is not so much we can do, and the same goes for when the mining capacity does not match the possessions.
News Source: www.smtnews.ir