The 6.9%, 4.1% and 18.8% increase in the electricity consumption of Iran’s steel, cement and base metal plants respectively during the first four months of the current fiscal year (March 21-July 22) compared with last year’s corresponding period indicates the proper management of electricity supply by the industries and energy ministries, according to an official with the Iranian Mines and Mining Industries Development and Renovation Organization (IMIDRO).
“It seems that the management of electricity supply for steel, copper, aluminum and other metal industries this year through the joint working group of the ministries of energy and industries has improved the management of electricity supply for these industries,” Amir Sabbagh was also quoted as saying by IMIDRO’s news portal.
According to the official, the daily electricity supply for steelmakers is in the range of 3,100 megawatt-hours at present, registering a 77% year-on-year growth.
Electricity consumption of aluminum, zinc and copper producers is in the range of 1,200 megawatt-hours, which is about 20% more year-on-year.
“The electricity consumption of cement producers increased by 4.1% YOY,” he added, noting that the daily electricity supply of cement producers is in the range of 800 megawatt-hours, registering a 33% growth compared with the same period of the previous year.
“The situation of cement production and supply has improved significantly in recent weeks compared to the previous year.”
$4b in Losses Suffered by Steelmakers Due to Power Cuts
Earlier, Rasoul Khalifeh-Soltani, the head of Iran Steel Producers Association, had called for a change in electricity supply restrictions imposed on steel plants in a letter to the Ministry of Industries, Mining and Trade.
“In the fiscal 2021-22, Iranian steel industry fell short of its target output by 6 million tons, inflicting a loss of $4 billion; restrictions levied on energy supply and power outages were the main reasons behind that loss,” he said.
In the summer of last fiscal year (June 22-Sept. 22, 2021), steel production declined by 40% compared with the previous quarter (March 21-June 21) due to electricity cuts amid record high domestic consumption.
In a letter to the Supreme National Security Council, ISPA put steel mills’ losses due to power outages at $6 billion from the beginning of last Iranian year (March 21) to Sept. 22.
According to ISPA, 82 days of productions were lost during the period due to power outages and 300,000 direct and indirect jobs were lost or restricted, the news portal of the association reported.
Summer demand led to a severe power and water shortage in summer in most regions, resulting in blackouts and dry taps.
The record came as high temperatures nationwide drove general electricity consumption to new heights in summer, prompting authorities to prioritize domestic users over industries in supplying power.
As the manufacture of steel and cement is an energy-intensive process, their factories were restricted by the Iran Power Generation, Distribution and Transmission Company and have been only allowed to work at a fraction of their demand during specified periods.
According to the World Steel Association, Iranian steel mills produced a total of 28.5 million tons of crude steel in 2021, registering a 1.8% decline compared with 2020.
Despite the decline in output, Iran maintained its global status as the world’s 10th biggest crude steelmaker.
In winter, the Oil Ministry and the National Iranian Gas Company put pressure on steelmakers and mining firms last year to drastically cut their gas consumption in winter.
Specifically, Chadormalu Mining and Industrial Company was asked to keep its gas consumption below 30,000 cubic meters per day. Since, the quota was less than 1% of the heavyweight mining firm’s gas consumption under normal conditions, the restriction practically meant cessation of production in Chadormalu, inflicting huge losses in lost production.
Certain companies were restricted for longer periods, while others were less affected.
Producers of direct-reduced iron (DRI) were the prime target of the restrictions due to their energy-intensive nature. Since DRI is considered a strategic and key product in the steel industry, the measure impacted the entire steel production chain and led to a decline in output of steel products and rising prices in the market.
With the decline in temperature across Iran, gas consumption in households set a record high last winter.
Bahram Sobhani, the head of the board of directors at Iran’s Steel Producers Association, had earlier voiced his concerns in a letter to Minister of Industries, Mining and Trade Reza Fatemi-Amin.
“Iran’s steel industries have managed to place the country as the world’s 10th biggest producer, despite all the restrictions and sanctions. Last year, the industry suffered losses due to gas and electricity shortage but did not, for once, think twice about cooperating with the government. Now, that we have the opportunity to compensate part of these losses, we do not expect the government to step in the way and use the situation to its own benefit,” he was quoted as saying by IRNA.
