Economy, Business And Markets

Steel Producers Decry Shortage of Raw Material

Steel Producers Decry Shortage of Raw Material
Steel Producers Decry Shortage of Raw Material

Iranian steel companies have been making every effort to obtain raw material, lack of which has left no room for steel businesses to concentrate on developing strategies, said general manager of Hormozgan Steel Company, Morteza Aqajani.

Aqajani told Fooladnews that the lack of raw material, including iron ore pellets, is threatening steel production.

The iron ore pellets needed for Hormozgan Steel Company were meant to be provided by the Gol-e-Gohar Iron Ore Mine located 55 kilometers away from the south-central city of Sirjan and some 250 kilometers away from the steel factory, he noted.

Aqajani said, “Only 1.4 million tons of the 2.8 million tons of iron ore pellets his company needs are to be provided by the iron ore mine this year (starting March 21).”

Gol-e-Gohar iron ore mine, with 1 billion tons of proven reserves and 290 million tons of probable reserves, is considered the biggest iron ore mine in the Middle East producing iron ore pellets and iron ore concentrates.

Some steel manufacturing firms have called on the government to provide them with foreign currency at an official rate, which is 20 percent cheaper than the street rate, so that they can import cheaper iron ore pellets.

At the steel plants, iron ore is processed into products with higher added value such as pipes and profiles, cars, and home appliances. Based on the 5th Five-Year Economic Development Plan (2011-2016), steel production in domestic factories should reach 55 million tons per annum, which is a tall order, as the production level is currently hovering at around 20 million tons.

Meanwhile, the constant rise in steel production during the past few years has made it necessary for the country’s industry officials to develop plans to expand iron ore pellet production units, Aqajani noted.

Currently, the domestically-produced iron ore pellets do not suffice to fulfill the needs of Iranian steel plants. Analysts say the steel sector is in short of 6 million to 8 million tons of iron ore pellets each year. Iran has so far imported the pellets from India and Bahrain.

Mohammad Reza Nematzadeh, minister of industry, mine and trade, has also underlined the need for extra production of iron ore pellets, urging the manufacturing companies to stop exporting the pellets and other raw material.