Iran’s extensive mineral endowment is emerging as a new consideration in global critical minerals supply chain planning as the G7 seeks to reduce dependence on individual suppliers of rare earth elements and permanent magnets. Leaders have agreed on a target of lowering reliance on any single non-G7 supplier to below 60% by 2030, with a longer-term objective of 50%, reflecting efforts to diversify supply away from dominant market participants.
The strategy extends beyond expanding mine development. Achieving the target also requires investment in mineral processing, refining, metallurgical capacity, chemical production, magnet manufacturing and long-term financing, areas where existing supply chains remain heavily concentrated.
Iran’s mineral inventory gains strategic attention
Iran, long viewed primarily through the lens of international sanctions, is increasingly being assessed for its mineral resources, industrial capacity and potential contribution to global supply chains. The country’s portfolio includes copper, zinc, aluminium, uranium-related assets, energy resources and industrial infrastructure that could become more significant if investment conditions improve.
According to the Center for Strategic and International Studies (CSIS), Iran holds approximately 2.6 billion metric tonnes of identified copper reserves, representing around 5% of known global copper reserves. The Sarcheshmeh Copper Complex in Kerman Province remains the country’s principal copper operation, while the Sungun and Miduk deposits provide additional production potential.
Copper has become increasingly important for electricity transmission, grid expansion, renewable energy infrastructure and data centre construction, placing greater strategic emphasis on large undeveloped resource bases.
Processing capacity remains the principal constraint
The G7’s supply chain objectives also highlight the importance of downstream mineral processing. While governments have promoted exploration and mining investment, refining, separation technologies, metallurgy, industrial chemistry and secure long-term offtake agreements continue to represent major constraints.
According to the International Energy Agency (IEA), China accounted for approximately 91% of global rare earth refining capacity in 2024 and continues to dominate permanent magnet manufacturing. This concentration makes the G7 diversification targets significantly more challenging despite increased mining activity elsewhere.
Although Iran is not positioned as a major rare earth producer, its reserves of copper, aluminium, zinc and other industrial minerals are relevant to infrastructure development, including electrical grids, transformers, substations, transmission cables and transport electrification. The country also occupies a strategic position between Asian and European markets that could support minerals processing and energy-intensive manufacturing if sanctions relief enables renewed investment.
Financing and sanctions remain major investment barriers
The availability of mineral resources alone is insufficient to support project development. Mining investments typically require financing over multi-decade timeframes, while sanctions policies and diplomatic agreements can change much more rapidly.
Previous experience following the 2015 nuclear agreement, the subsequent reopening of parts of Iran’s economy, the later withdrawal of U.S. support and the reimposition of sanctions continues to influence investor assessments. Projects such as mine expansions, concentrator upgrades and smelter developments require confidence that operating conditions will remain stable throughout their investment cycle.
Western financial institutions would likely require comprehensive safeguards before participating in Iranian mining projects, including sanctions-compliant payment mechanisms, transparent ownership structures, escrow arrangements, political risk insurance and legally enforceable offtake agreements. Even with such measures, commercial lenders may remain cautious because the principal challenge lies in investment risk rather than geology.
Regional stability affects mineral processing costs
Regional trade conditions also influence mineral supply chains beyond direct mine production. The reopening of the Strait of Hormuz and improved shipping conditions would affect the availability of sulfur and sulfuric acid, both critical reagents used in processing lithium, nickel, copper and rare earth elements.
CSIS reported that sulfur prices increased by more than 50% during the recent conflict involving Iran, while sulfuric acid prices more than doubled in some markets. These increases directly affect operating costs for mineral processing and refining facilities.
As a result, Iran’s role in global mineral markets extends beyond its own resource base. Regional stability could also reduce input cost volatility for processors located elsewhere by improving access to essential industrial chemicals and transport routes.
Cost advantages compete with elevated political risk
The absence of coordinated pricing mechanisms to support non-Chinese mineral projects remains another challenge for the G7 strategy. While governments seek to establish alternative supply chains, higher production costs, permitting delays and financing challenges continue to affect project economics outside existing dominant suppliers.
Iran’s large copper resource base could attract attention because of its geological potential and comparatively lower development costs. Investors must also consider sanctions exposure, political instability, corruption concerns, currency risks, payment restrictions and reputational considerations. These risks may require government-backed investment frameworks rather than conventional private financing.
If Western investment remains limited, development of Iranian mineral assets could instead proceed through Chinese, regional or other non-Western investors with greater tolerance for sanctions-related complexities. Such an outcome could further strengthen non-G7 participation in strategically important mineral supply chains.
European market access would require compliance upgrades
For Europe, secure supplies of copper, aluminium, nickel, lithium, rare earth elements and permanent magnets are increasingly important for electrification, defence manufacturing, renewable energy and industrial production. Any future imports from Iran would also need to comply with European environmental, social and governance requirements alongside sanctions regulations.
Iranian producers seeking access to European markets would likely need detailed emissions reporting, transparent mine planning, documented tailings management, labour compliance systems and verified export documentation capable of meeting EU regulatory standards.
Investment linked to modern smelting facilities, cleaner energy sources, digital monitoring systems and verified emissions reporting could support future integration into European industrial supply chains if sanctions conditions permit.
Resource development depends on durable policy frameworks
Iran’s mineral sector illustrates the broader challenge facing efforts to diversify critical mineral supply chains. While the country possesses a substantial copper resource base, underinvested industrial infrastructure and strategic geographic location connecting Gulf, Central Asian, European and Asian trade routes, financing remains closely tied to political stability and sanctions policy.
Initial opportunities would likely focus on technical evaluations, brownfield rehabilitation, equipment supply, geological resource assessment, processing studies, compliance systems and state-supported infrastructure projects rather than large-scale private mine financing.
The G7’s objective of reducing dependence on individual suppliers requires not only additional mining capacity but also financing mechanisms, processing infrastructure, energy security, transport resilience and durable supply partnerships. Iran’s mineral resources demonstrate both the opportunities and the investment challenges associated with developing critical mineral projects in higher-risk jurisdictions.
