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In the next three to five years, the removal of Western sanctions will accelerate the growth of Iran's mining sector, containing vast underdeveloped reserves yet still dominated by state-owned companies. However, progress will be slow and we expect the sector to face major challenges in the next two-to-three years.

In March 2017, Iran abolished taxes on iron ore imports in a policy U-turn after planning to ban the export of iron ore fines and lumps in order to allow only the export of higher value-added iron ore pellets. The country's Gol-e-Gohar Mining & Industry started running its 5mn tonne a year pelletising plant in the fourth quarter of 2016. Iran's iron ore production growth will post an annual average of 5.7% during 2017-2021, compared to 3.9% in the previous five years.

We forecast prices to fall from USD70/tonne in 2017 to USD46/tonne by 2021. Production growth will be positive, due to vertically integrated state-owned companies like Mobarakeh Steel Company, Esfahan Steel Company, National Iranian Steel and Khouzestan Steel, which are looking to increase steel production in the coming years.