In terms of amount of coal reserves, Iran is one of the richest countries in the Middle East and it could be a good opportunity for Iran to use this advantage however it has not been honored properly and the reason lies in lack of appropriate technology and innovation since this industry consists of exploration, extraction and processing and these are not highly developed in Iran, of course, after JCPOA, the obstacles are expected to be removed and  JCPOA provide the base for attracting foreign investment and by investment in this field upgrading to up to date technologies would be achievable easier. During the last few months, great financing agreements between Iran and China and also Iran and South Korea has been signed in which coal industry is in list of priority to invest. Low quality of products, pricing fully by the authority and monopolistic market are main obstacles in flourishing this industry. Recently, Ministry of Industries, Mining and Trade of Iran enforce a new pricing method for coal in order to attract investors.

Iran’s coal proved reserves are near 1.1 billion tons and probable reserves are around 7.1 billion tons, which around 72 percent of this is coke coal and the rest is thermal coal. These rich reserves place Iran in twelfth rank among other countries with possessing more than 2.1 percent of all global reserves. Number of coal mines is exactly a hundred out of 5,355 of all kinds of mines in Iran according to 2014 national census data. Based on this data, more than 55 percent of all reserves are in Tabas, a city in Southern Khorasan province that contains 28 coal mines.  Although Tabas is very rich in thermal coal, extraction from its mines is insignificant and it mainly exports to Turkey and Eastern European countries directly because there is no internal consumer due to cheaper oil and gas. Fortunately, Iran plans to build its first thermal power plant which will be fed by thermal coal because of its new strategy for diversification in energy portfolio. Following figure illustrates amount of coal concentrate produced during the last few years, which clearly shows steady growth after dramatic plunge in production began in 2008.


Almost all produced coke coal is consumed in process of steel production and provide the demand of steel makers with blast furnace approach, which the only consumer in Iran is exclusively Esfahan Steel Co. Regard to this monopolistic power of sole consumer and governmental support for this steel producer, price of coke coal is always under control and determine by IMIDRO. As figure shows, the price of coal of Negin Tabas Co, which is traded in Tehran Stock Exchange with tick of TBAS1, is almost steady during the last five years whereas world price faced fluctuations. The figure also depicted lower price of local producer in compare of world prices that is mainly because of lower quality of internal production. Last month, during a meeting between the Minister of Industries, Mining and Trade of Iran and coal committee, new pricing method presented but still there is a major ambiguity in pricing. According to this new method, coal price determined 27 percent of steel billet but the kind of coal is not defined certainly. This kind of pricing has been precedent in iron ore concentrate, which is 13 percent of billet price.


In the table below, capacity and production of three main companies which produce coal in Iran and are traded in Iran Stock Market has been shown.


Considering ambitious plan in Iran`s steel industry in order to reach 55 million tons production in 2025, blast furnace steel production capacity must reach to 6 million tons from the current 3.5 million tons. This would not be practical unless production of coking coal and coal concentrate increase to 3.2 and 4.5 million tons respectively, which current output of coal concentrate is near three million tons. Additionally, projected plans in coking units will increase demand for coal after they become operational in near future.

To wrap it up, deprived coal industry experiences new conditions and needs further attention. Although new pricing method do not change coal price significantly, it is a step forward to rescue from unfair pricing. Magnificent prospect of steel industry due to 2025 vision plan in Iran and new strategy in diversification of energy portfolio call for revolutionary reforms, massive investment and new technologies in coal industry.