Iran's largest state-owned mining holding and a consortium of steelmakers signed an agreement on Sunday to invest $1 billion in setting up an integrated steel production chain in Kurdestan Province.
"As per this agreement, capacities will be established for the production of 2.5 million tons of iron ore concentrate, 2.5 million tons of pellet, 1.6 million tons of direct-reduced iron, 1.5 million tons of molten metal and 1 million tons of flat steel per year," said Mehdi Karbasian, chairman of Iranian Mines and Mining Industries Development and Renovation Organization.
"Two or three of the six plants are set to start production in the next three years," he added.
According to Mohammad Darevazmi, the head of Kurdestan Province's Industries, Mining and Trade Organization, the consortium is made up of Kimia Maaden Sepahan Company with a 16% share, Emdad Mines Mobilization Development Company with 20% and Sabanour Mining and Industrial Development Company with 20%. He added that IMIDRO owns a 44% stake in the consortium.
IMIDRO has planned the project up until semi-finished steel production, but "steps beyond that will be determined and taken by the private sector", said Karbasian, who doubles as deputy minister of industries, mines and trade.
Kimia Maaden seems to be in charge of raw material procurement for the production chain, as it has been operating Bijar County's Sarab Iron Ore Mine since the fiscal 2007-8. The company's headquarters is based in Isfahan Province, but most of its operations are in Kurdestan.
Sabanour is already operating an iron ore concentrate plant in the western province through beneficiation of low-content with a total capacity of 1 million tons per year. It is also the owner of a transportation company, Bar Bijar Mineral Transportation Company, operating in the province, according to data on its website.
Kurdestan Province is home to 20 iron ore mines holding about 74 million tons of the country's 2.8 billion tons of proven reserves, IRNA reported.
The province had a steel mill called Zagros Steel Company more than a decade ago. The company, however, went bankrupt and was officially declared insolvent by its owner, Social Security Organization, about six years ago. This led to the unemployment of 400 skilled workers.
Kurdestan's representatives in the parliament have long lobbied for involving the now dysfunctional plant in the new steel projects launched in the province. Despite the recent agreement to get the steel industry rolling in Kurdestan, it's still unknown whether new steelmaking plants will be established or the one already in place will be renovated and used.
Whichever the case is, the new capacities installed in the province will help realize Iran's ambitious steel production goals. The country aims to become the world's sixth largest steelmaker by amassing 55 million tons of crude steel production capacity until 2025. It has so far realized just above 30 million tons of the target.
Iran’s steel output stood at 21.72 million tons in 2017, according to World Steel Association, up 21.4% compared to the year before.
The latest production data for March 2018 make Iran the world's 10th largest producer of steel, placing it between Brazil and Italy.
The country plans to boost crude steel output by expanding DRI capacity and become the world's second largest in terms of production after India.
Iran produced 6.16 million tons of steelmaking material in Q1 of 2018, up 52.4% year-on-year.
