Iran’s copper industry is facing a widening gap between global opportunity and domestic reality. While international demand for copper is rising on the back of renewable energy projects, artificial intelligence infrastructure and electrification, Iranian producers are struggling with supply shortages, regulatory instability and rising production costs.
Copper, often described as the “metal of the future,” has become one of the world’s most strategic industrial commodities. Its strong electrical conductivity and durability make it essential for power grids, electric vehicles, construction and electronics. The global transition toward green energy has further strengthened long-term demand expectations and supported higher international prices.
Despite holding significant mineral reserves and large copper resources, Iran has not managed to expand production in line with its mining potential or development targets. Under the country’s Seventh Development Plan, annual copper cathode production is projected to reach 800,000 tons by 2029, while downstream industries are expected to produce 600,000 tons of semi-finished and finished copper products annually. Industry participants, however, say current policies make these targets difficult to achieve.
The sector has been weighed down for years by state intervention in pricing, export restrictions, rising mining royalties, energy shortages and constant regulatory changes.
Producers also complain about difficulties in accessing export revenues and securing enough fuel and raw materials.
Regional tensions and the recent conflict have added fresh pressure to the industry. Disruptions to infrastructure and continued restrictions at southern ports have complicated logistics and raised operating costs across the copper chain.
Kourosh Shabani, an industry insider, said military attacks on Iranian territory and disruptions in southern ports had negatively affected production and operations throughout the copper sector.
“Problems in supplying electricity, fuel and raw materials have intensified after the war, and these shortages are directly damaging production,” he told Donya-e-Eqtesad.
Major Concern
One of the biggest concerns for producers is the rising cost of sulfuric acid, a key input in copper cathode production through leaching technology. A large portion of Iran’s leaching capacity is operated by the private sector.
Shabani said tensions in the Middle East had disrupted sulfuric acid production globally and pushed international prices higher. “Previously, sulfuric acid accounted for around 20% of cathode production costs in leaching units. If domestic prices move fully in line with global rates, that share could rise to as much as 50%,” he said.
According to him, such an increase would push some leaching units out of profitability. He argued that supplying sulfuric acid at “fair prices” through state-affiliated companies could ease pressure on producers and help sustain operations.
Fuel supply has also emerged as a serious challenge. Diesel is essential for mining machinery and electricity generation in remote mining areas. Shabani warned that tighter diesel supply and possible price hikes could weaken extraction activities and disrupt downstream production.
“At some mines, diesel is used not only for heavy machinery but also for power generation. Any disruption in supply or increase in prices eventually harms mining operations and copper output,” he said.
Source of Frustration
Pricing mechanisms are another source of frustration. Copper ore and concentrate prices in Iran are determined based on coefficients linked to cathode prices traded on the domestic commodity exchange. Producers say local cathode prices are often significantly lower than those on the London Metal Exchange, reducing profitability across the chain.
Mining companies are also struggling with shortages and higher prices of explosives used in extraction activities. According to Shabani, these shortages have become more severe since the conflict began, making mining operations increasingly difficult.
Industry participants warn that continued pressure on the sector could force some mines to reduce or suspend operations, potentially leading to layoffs.
Export conditions remain another major obstacle. Although international copper prices remain attractive, exporters face losses because of the large gap between official and open-market exchange rates and strict foreign currency repatriation rules.
Shabani called on policymakers to ease currency repatriation requirements if export conditions improve. He suggested allowing exporters to retain up to 80% of their export revenues to finance operational needs and imports.
He also urged the government to introduce support measures, including low-interest working capital loans, tax relief and reductions in mining royalties, to prevent production cuts and job losses.
For now, Iran’s copper industry remains caught between strong global demand and growing domestic constraints. Unless structural reforms are introduced, analysts warn that the country could miss a rare opportunity to strengthen its position in one of the world’s fastest-growing commodity markets.
