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Stone business in the global market

 Publish Date: Sunday, February 18, 2018
Stone business in the global market
Undoubtedly, the way that the country's economy is out of recession is the industries that, despite their high potential, are working far beyond their potential. The country's stone industry is one of the sectors that should be considered as one of the main priorities of the government in development programs, considering the richest and most diverse reserves in the world. Currently, the industry's share of the global market is not beyond one percent.
In order to scrutinize the current situation of the market and examine its problems, we interview with one of the experts in this industry, i.e. Mr. Akbar Zanganeh, the chairman of the board of directors of the marble company in Iran, the largest producer of marble in the country. Zanganeh criticized the main problems of this industry in two parts of supply and demand. Zanganeh believes that the industry needs to recover from a stagnant situation by identifying foreign effective target markets in the demand sector, due to the reduction in the volume of construction and development activities inside the country. This is possible in light of the incentive policies of government exports and the appropriate commercial-political relations with other countries. Zanganeh also evaluates the current state of the technology industry to respond to demand, but it is not possible to inject raw materials consistent with available demand at reasonable prices given the lack of proper equipment in the mining sector. Zanganeh considers the solution to this problem in conducting the banking facility to this sector.

How do you evaluate the potential of the Iranian stone industry, and in particular the potential of the country in marble?
Iran has the first place in terms of the amount of stone reserves and the diversity of marble rocks in the world. Therefore, in terms of resources, we have a very high potential in the world. Marble is a product that has been in special demand since the present and currently demand for this stone has grown considerably both in the domestic and foreign markets. Marble is one of the unique stones that its use in religious places, churches, hotels, restaurants, palaces, castles, etc. has also caused a good demand in the global markets where the country's stone industry will advance to gain market share. That seems to be a big deal with the current problems.
What can you do to get global markets in the stone industry? What are the problems of this industry in the field of exports?
The easiest way in this field is to participate in various exhibitions or rent a warehouse and establish a showroom in the country of destination. But if we want to scrutinize the main reasons for reducing the demand for marble exports, two main reasons can be stated. First, it should be noted that the largest marble customer in the world is the United States of America that we have practically no access to this market because of the political difficulties between the two countries, and our products enter the market of this country in an intermediate manner. For example, our products are exported to China, Italy or Spain as raw materials, and then sent to the markets of America, Australia and Canada after processing. The presence of intermediaries will reduce our share of this market. But another major problem is the lack of access of the country's stone activists to the appropriate banking channels for commercial transactions. The nature of the stone exchanges is due to the high exchange rate so that the parties need time to trade and the use of credits is inevitable. A foreign buyer should have enough time to market and sell the stones and deliver them to the next customer, we also need to have a reference to know that we will get our money within a specified time, but applicants will actually lose their planning power in the absence of credits and they are unwilling to buy from us. Thus, the lack of proper bank channels is one of the factors affecting the reduction of the volume of international demand for Iranian processing stones.
 
How is the industry's domestic market situation?
Now we are faced with a high supply surplus on the domestic market. In one estimate, production volume is more than 4 times the domestic demand. Unfortunately, the infrastructure of the stone industry has been shaped by short-term shocks in the domestic market, and the lack of effective demand for the industry has already been unused. Between 2009 and 2013, huge projects such as Maskan Mehr or Metro and government building activities have increased the capacity of the factories and the establishment of a large number of factories, but many manufacturers are currently in doubt with the decline in construction and the reduction of domestic demand. Of course, creating an effective demand can still be an important solution. For example, the housing exit from a recession or, more importantly, the expansion of the export of stone products is the only way forward for using the potential of this industry.
 
Is raw retail of stone products a factor in reducing the development of stone industry?
I believe that the idea that raw stone exports are a factor in reducing economic value is inaccurate. Six, seven years ago, with the aim of increasing value-added exports of cut stone, toll 70 percent was applied to raw stone exports, but it was surprisingly observed that cutting stone exports reduced by decreasing the raw stone exports. It should be noted that part of the effective demand on the market is absorbed from the raw stone channel. Almost no place in the world, even in highly developed industrial countries, which have a significant advantage in the stone processing with high quality and low prices (such as Italy and China), do not prevent the export of raw stone. Raw stone itself has a value added of 50% and a semi-processed material, so it cannot be said selling raw crude products is an obstacle to the process of foreign exchange to the country.
 
Which section of the stone industry should be reformed?
As you know, each market is moderated according to the supply and demand mechanism. Perhaps at first glance, the figures indicate surplus supply in the stone industry, but we do not have a suitable supply consistent with real demand in the export market. Currently, most of our factories, although not having an high-advanced production line, have some of them up to 90% of the equipment needed to produce high quality stones that can meet the demand for these products. The missing link in the production cycle of stone industry is mine production capacity consistent with efficient demand. In other words, our mines do not have the necessary equipment to increase production in products that have a good export demand.
What is the root of the movement of banking resources towards the factories? What is the strategy of injection into mines?
Providing collateral for high-amounts banking facilities has been one of the main factors driving financial resources towards the factories. Mining licenses have a short-term credit, for example, 5 years, and then, if not renewed, it is void, but the factories are capable of ownership. This is a logical behavior of the banking system, just like any business enterprise, which places the factories at the priority of the loan. But in terms of substance, the capacity of efficiency and creating value-added in mines are much higher than that of factories. In other words, if the justifying and technical appraisal and technical design of the mines are evaluated expertly and scrupulously, not only do banks achieve the principal and interest of loans granted, but the stone industry also benefits from the side-effects of this approach, which is to reduce the price of raw materials and increase the production capacity of mines. While targeting mines as the main destination of the facility, we need to connect the effective demand in the global market to its body. Mines should be strengthened in the production of demanded products in the foreign market, which is the main reason for the out of the industry from recession. Perhaps the consideration of the expert plans of this sector and the involvement of the government in order to guarantee them based on a merit-based approach is worth knowing. At present, our mines do not have the necessary investment power in this sector.


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Tag : business global markets stone