Economy, Business And Markets

Financing For 7 Steel Projects a Step Forward

Financing For 7 Steel Projects a Step ForwardFinancing For 7 Steel Projects a Step Forward

Three representatives from the Chinese state-owned company MCC have arrived in Tehran for talks on injecting €1.8 billion to finance seven national steel projects by May 21, Fooladnews quoted deputy minister of industry, mine and trade Mehdi Karbasian as saying.

During a recent visit to China by an Iranian delegation, the country’s pressing issues regarding the steel projects were conveyed and the China Metallurgical Group (MCC) decided to send three representatives in Tehran to facilitate the process of financing the projects, said Mehdi Karbasian, who is also the head of the Iranian Mines and Mining Industries Development and Renovation Organization (IMIDRO).

He added that IMIDRO, as the holder of 10 to 35% of the shares at the seven steel plants (known as provincial steel projects), is closely following up on the opening of letters of credit for the projects, which are said to have the capacity to add at least 6 million metric tons to the country’s total annual steel output upon completion.    

According to Karbasian, plans are underway for the seven steel projects to start operation within 36 months, emphasizing that a number of them will start production within two years. He stressed that IMIDRO is doing its best to help at least three out of the seven plants run their sponge iron phases in the current Iranian calendar year 1394 (started March 21).

The industry ministry held a meeting less than a month ago with the contractors, consultants, and the boards of directors for the projects with the aim of coordinating the activities.

“The sponge iron (technically known as direct-reduced iron or DRI) sections at Sepiddasht (in the southwestern Province of Chaharmahal and Bakhtiari) and Shadegan (in the central Isfahan Province) steel plants have made significant progress and a major part of financial issues for the two projects have been resolved”, Karbasian, as the head of the country’s major state-owned holding company active in the mining sector commented.

He added that Sabzevar steel project (in the northeastern Khorasan Razavi Province) as well as Ghayenat steel plant (in South Khorasan Province) have also made good progress considering the fact that the LC’s for the two projects were opened three months ago. However, he said the two projects are still facing problems in providing natural gas and water.  

The IMIDRO head expressed concern about Mianeh steel project (in the northwestern Province of East Azarbaijan) as “the project was the first among the seven plants for which the letter of credit was opened but it was sold by the Iranian Privatization Organization (IPO) and the activities in the project have come to halt since February due to disputes between the IPO and the new shareholders”. The deputy minister urged the IPO to allow the IMIDRO to finish the Mianeh steel project so that the plant can be transferred to new shareholders after completion.

Earlier, Mohammad-Reza Nematzadeh, the minister of industry, mine and trade, said the administration cannot tolerate any delays in implementing the seven steel projects, adding that the equipment and the machinery needed for Ghayenat and the other six projects should be domestically supplied and that the ministry would lend support for the strategic projects to be completed as fast as possible.

The provincial steel projects –each with a production capacity of 800,000 tons a year– were launched in 2006, but they were never finished due to budget constraints. The incumbent government is determined to implement the projects in line with achieving the goals of the 2025 Vision Plan. According to the strategic plan, the country, which is the world’s 14th steel manufacturer, should annually produce up to 55 million tons of steel by 2025.