Domestic Economy

Italy Enters Action Stage

Italy Enters Action StageItaly Enters Action Stage

A 250-strong Italian business delegation led by the European country’s Prime Minister Matteo Renzi is expected to arrive in Tehran today.

The high-ranking delegation, comprising top Italian economic players, bank representatives and industrialists, will sign “final contracts” with Iranian private and public sector firms, “as there have been enough talking and we are awaiting our entry into the action stage”, says Italy’s Ambassador to Iran Mauro Conciatori.

According to Iran’s Ambassador to Italy Jahanbakhsh Mozaffari, Italian companies are planning to sign contracts with their Iranian counterparts in the fields of science and technology, tourism, environment and railroad transportation, IRNA reported.

In addition, two mining deals worth nearly €95 million are set to be signed by the two countries.

European countries and businesses are eager to establish trade ties with the $400 billion economy of Iran, which rejoined the global trading system in January following a deal struck with six major world powers to lift western economic sanctions in exchange for liming its nuclear program.

Representatives of Italy’s Export Credit Agency SACE, the country’s national oil company Eni as well as the General Confederation of Italian Industry commonly known as Confindustria will also accompany Renzi in his Iran visit, Mehr News Agency reported.

Italian companies, including shipbuilder Fincantieri, Ansaldo Energia and state railroad company Ferrovie dello Stato have all signed deals with Iranian companies and cemented a foothold in the country.

Fashion house Roberto Cavalli and leather firm Piquadro have also recently opened shops in the capital Tehran.

The Italian premier is scheduled to hold meetings with top Iranian officials, including President Hassan Rouhani, First Vice President Es’haq Jahangiri and Parliament Speaker Ali Larijani during the two-day visit.

  2nd Follow-Up to Rouhani’s Visit

The Italian delegation’s visit is the second follow-up to President Hassan Rouhani and his accompanying high-ranking delegation’s visit to Italy in late January–the first trip made to Europe by Iranian officials in the post-sanctions era.

Deals worth $18.4 billion were signed in a wide range of fields between the two countries.

Among the deals struck during Rouhani’s visit were a pipeline contract worth nearly $5 billion for oil services group Saipem, a €4 billion contract with the infrastructure firm Condotte d’Acqua, and up to €6.2 billion in contracts for the Italian steel firm Danieli Group.

The agreement with Danieli, reached between the group and the Iranian Mines and Mining Industries Development and Renovation Organization, entailed a joint venture for supplying Iranian steel and aluminum companies with high-tech machinery and plants, valued at $4 billion.

The joint venture entails the establishment of the “Persian Metallics” company in Iran by Danieli’s plant-making division with an initial investment of $2.18 billion by the Italian side. Its construction will kick off as soon as Italy’s export credit agency SACE provides the company with the required finance, and the project is scheduled to be completed in four and a half years.

Based on the 20-Year Vision Plan (2005-25), Iran aims to produce 55 million tons of steel per year which, in turn, requires an annual production of nearly 77 million tons of iron ore concentrate and 72 million tons of pellets.

The Italian presence in the industry will not only help Iran achieve the envisioned figures, but will also help reduce the country’s reliance on pellet imports, as close to 2 million tons of which were imported during the previous Iranian year (ended March 20, 2015).

During the Iranian delegation’s visit to Rome, Ferrovie dello Stato (FS), Italy’s main rail operator, agreed to provide technical assistance for Iran’s rail projects. FS is a government-owned holding company that manages infrastructure and services on the Italian rail network.

Also in Rome, the Italian shipbuilding group Fincantieri signed a series of preliminary agreements with Azim Gostaresh Hormoz Shipbuilding Industry Company, a new Iranian shipbuilding complex strategically positioned in the Persian Gulf Special Economic Zone worth several hundred millions of euros.

The Iranian company is a subsidiary of Iran Shipbuilding and Offshore Industries Complex Company.

Italy’s ministers of Infrastructures and Transport, Graziano Delrio, and Agriculture, Food and Forestry Policies, Maurizion Martina, also visited Iran early February at the helm of a 310-member delegation, and met with Iran’s Minister of Roads and Urban Development Abbas Akhoundi, Agriculture Minister Mahmoud Hojati and Deputy Oil Minister Amir Hossein Zamaninia during a joint business conference held in Tehran.

During the conference, Iran and Italy signed four memoranda of understanding to expand cooperation on railroads, oil and gas, after-sales services and holding exhibition.

The MoU on railroad cooperation was signed between Iranian private companies and their Italian counterparts. It entails the supply of rail parts by Italy to Iran along with organizing human resources training programs.

According to Mohammad Goudarzi, an official with the Ministry of Industries, Mining and Trade, eight of the 26 contracts and MoUs signed with Italy have so far been put into action.

The contracts were in the fields of mining, energy, aerospace, medicine and transportation.

The Danieli Group has also kicked off the construction project of a steel manufacturing plant in Albroz Province’s Eshtehard Industrial Park. The plant’s foundations have been set and the required industrial shed, which house the machinery and production equipment, are near finalization.

According to the project manager, Roberto Lita, close to €30 million have been invested for the construction of the plant which, when finalized, will create 400 direct and 3,000 indirect employment opportunities.

“This is one of Danieli’s most important international projects and will be a trial for the group’s future activities in the Middle East and Asia,” he said.

Before the emergence of sanctions against Iran, Italy was Iran’s top trade partner in Europe.

According to data from Italy’s National Institute of Statistics, bilateral trade value reached €7 billion in 2011–the highest in the two countries’ history.

However, Italy’s energy imports from Iran halted following the imposition of European Union’s sanctions on Iranian oil trade. The lifting of sanction has improved the condition, as bilateral trade value stood at nearly €1.9 in 2014 and €814 million for the first six months of 2015, showing a gradual, but upward trend.