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An Iran without sanctions represents big opportunity.

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In 2002 it was discovered that the Iran was attempting to enrich uranium, which many feared was so that the country’s military could produce a bomb. While Iran initially agreed to inspections of its nuclear sites by the International Atomic Energy Agency, the election of President Ahmadinejad in 2005 saw talks stall and the agency was never able to confirm whether there was an intention to produce a bomb. Iran maintained that it was simply trying to produce nuclear energy.

 

As a result of this sanctions were introduced in 2006 by the international community and toughed by the EU and US in 2012. For procurement these sanctions closed off sources of supply for some key raw materials.

 

But this situation could be about to change after it was announced that the E3+3 (China, France, Germany, Russia, the UK and the US) had come to an interim agreement with Iran that will see the country curb its nuclear enrichment activities and in return see sanctions eased, opening up sourcing and further commercial opportunities for businesses.

 

Speaking to Procurement Leaders Francois Roblin, interim procurement director at Buhler Group, recalls the impact of the sanctions five years ago. "Back in 2007 I was working on a deal to source copper and plastics from Iran but it collapsed because the company I worked for were listed on the US stock exchange and the possible sanctions meant we couldn’t get it finalised."

 

Now with a deal that looks set to hold, Roblin, like many others, holds hope that this could "open up new sources of copper, plastics and oil". Iran sits on vast stockpiles of oil and metals and so could result in an increase in the supply of these raw materials to the open market, which should see prices fall.

 

Roblin also notes that Iran’s infrastructure network will need investment before it can begin to produce these materials efficiently, but at a time when commodity prices are at historically high levels this will come as welcome news.

 

Understandably in a market that many will be unfamiliar with, some will have a hesitation about sourcing from here particularly in the short-term, but that wariness should fall away as the commercial opportunity makes itself clear and perceptions of the country shift. 

 

"Despite how it has been portrayed in the media, the country is relatively free. It has several political parties who are genuine opponents, elections and the people there are very friendly and very proud," Roblin says.

 

With a relatively wealthy population of some 80 million and largely untapped resource potential, this deal should have wide-reaching impact on those looking for access to the abundance of raw materials in Iran and the countries’ increasingly sophisticated manufacturing market. 

 

 

Tim Burt
Posted by Tim Burt