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Iran is open for business: why B.C. companies should care

Iranian expatriates urge Ottawa to lift sanctions and restore diplomatic ties with Iran
kambiz-taheri-polymer
Polymer Research founder Kambiz Taheri is among the many Iranian expatriate businessmen living in Vancouver | Dominic Schaefer /BIV archives

Iran’s government is going on an epic spending spree, and Iranian businessmen who now call Canada home are urging the Canadian government to accelerate its plans to restore trade relations with Tehran.

“The opportunity’s there, and if Canadians want to grab a piece of this, they need to move fast,” said Kambiz Taheri, a chemical engineer from Iran who founded Polymer Research Technologies, which developed technology for recycling polyurethane.

“Unfortunately, European companies have an advantage over Canadians because of their presence in Tehran,” added Faramarz Bogzaran, founder of Calaeris Energy & Environment, which developed new technology for cleaning up waste from oil wells. “The longer the sanctions are there, I think that probably more opportunities are going to be lost.”

Following Iran’s agreement to limit its nuclear aspirations, economic sanctions that have been in place since 2006 have been lifted. Iran has wasted no time in courting international trade.

Iranian president Hassan Rouhani was in Europe during the last week of January to ink $60 billion worth of deals with companies like Airbus (EPA:AIR) and Peugeot (EPA:UG).

That might be the tip of the iceberg, as Iran begins making up for a lost decade in which investment in infrastructure and industry was slowed to a trickle.

Jim Quick, president of the Aerospace Industries Association of Canada, said there could be significant opportunities in Iran for Canada’s aerospace companies, from Bombardier Inc. (TSX:BBD.B) down to the many fabricators and component makers in B.C.

The association has been lobbying the Canadian government since December to remove sanctions preventing companies from bidding on lucrative contracts in Iran.

The country is also reportedly planning to seek foreign investment to develop $29 billion worth of new mines and to double its steelmaking capacity.

In a recent report on Iran, Moody’s said the country has “significant economic growth potential,” predicting economic expansion in 2016-17 will be 5%. Iran’s own growth target is 8%.

As Moody’s points out, Iran has a diversified economy that is less vulnerable to low oil prices than are other oil-producing nations because a decade of economic sanctions forced it to cope with lower oil prices.

“International sanctions meant that Iran had to adapt to the reality of lower oil revenues and implement structural reforms much earlier than other oil exporters,” Atsi Sheth, Moody’s associate managing director, said in the recent report. “Most other oil-dependent sovereigns are only just beginning to consider structural fiscal reform.”

Ali Sheykholeslami, an Iranian expatriate and engineer with JDS Energy and Mining Ltd., said he started getting calls from mining companies in Iran several months ago. JDS provides a wide range of services for the mining industry.

“I think there are lots of opportunities there,” Sheykholeslami said, “but we should move fast.”

The company is prohibited from working in Iran, because Canadian economic sanctions are still in place. Canada also has not yet restored formal diplomatic relations with Tehran.

Canadian Foreign Affairs Minister Stéphane Dion has promised to lift the sanctions and re-establish formal diplomatic relations. Global Affairs Canada could not give any timelines as to when that will happen.

Iran might not be the next China, but it is already a Middle Eastern powerhouse with a decade of pent-up demand for new infrastructure, and its new rapprochement with the West could lead it to eclipse Saudi Arabia as the region’s most powerful country.

Iran is already the second-largest economy in the Middle East. It is the world’s fourth-largest oil producer, has the world’s second-largest gas reserves and is the richest of all Middle Eastern countries in terms of mineral wealth, much of it undeveloped.

Mickey Fulp, who publishes the Mercenary Geologist, owns a mineral database for Iran. He believes there are huge opportunities there for new mine development.

“The geology and tectonics of Iran are compelling,” Fulp said. “It’s very well endowed, especially in copper. It has very large iron ore deposits; it has huge zinc and lead deposits. It certainly has significant uranium potential.

“It’s a very well-developed country with a significant mineral industry, but it has had no outside investment or exploration or mining financings for years.”

Unlike Saudi Arabia, whose economy is almost entirely based on oil, Iran is an industrialized country with a diversified economy, a highly educated population and industries that include automobile and defence manufacturing, petrochemicals, steelmaking and smelting.

However, its infrastructure has languished under more than a decade of trade sanctions that prevented foreign companies – including Canada’s SNC-Lavalin (TSX:SNC), which has a history of working on major projects in Iran – from entering joint venture partnerships.

Iran suddenly has access to US$150 billion – assets that were frozen in foreign banks as part of the trade sanctions. While much of that may be owed to creditors, it still leaves Iran with billions to invest in modernizing its infrastructure and revitalizing industries like mining. Iran is also vigorously courting direct foreign investment.

Because of their proximity to Iran and deeper trade ties with it, European companies have an advantage when it comes to doing business there. Canada’s relations with Iran have been, at best, strained since the 1970s.

But Canada has a substantial Iranian expatriate population and high-tech companies specializing in engineering for extractive industries. There are an estimated 95,000 Canadians of Iranian origin. Many of them live in the Lower Mainland.

Taheri is just one of the many Iranian engineers who immigrated to Canada and are now fielding calls from Iranian counterparts looking for Canadian technology for a wide range of sectors.

“I have been approached by numerous friends and contacts to look for technologies, like in the clean-tech sector. There are tons of opportunities. There are things Canada has that maybe Europe doesn’t have.”

Taheri added that there are five sectors in which Canadian technology and know-how could find a market in Iran: fisheries, agriculture, petrochemicals, clean technology and mining.

Sheykholeslami was in Iran two years ago and visited the country’s largest copper mine. Based on what he saw, he believes there is a demand in Iran’s mining sector for technology that helps reduce environmental damage.

Bogzaran agreed. He said there is a demand in Iran for a wide range of technology that addresses air, water and land pollution.

“I think the opportunities for Canadian companies are definitely in oil and gas capabilities and mining capabilities.” 

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