Economy, Business And Markets

Setting Up Asphalt Factory

Setting Up Asphalt FactorySetting Up Asphalt Factory

Asphalt market is in a favorable condition, thanks to municipalities’ year-round projects to renovate and maintain streets and highways, says an asphalt producer and contractor.

Ahmad Samali added that municipalities are the main consumers of asphalt, as the housing and urban development projects have been grappling with recession in recent years.

Asphalt concrete (commonly called asphalt, blacktop, or tarmac) is a composite material bound together with asphalt, laid in layers and compacted. Most of the asphalt produced in Iran is used in road construction, road surfacing and airport runways, Forsat-e Emrooz daily reported.

“The main ingredients of asphalt are all domestically produced in the southern cities due to their proximity to sand mines and petrochemicals. We can even claim that the end-price of producing asphalt in Iran is lower than its global average,” Samali said.

According to another producer, Soroush Kiyanian, import and export of asphalt are not possible since the product is order-oriented.

“You cannot produce and store it beforehand since the material turns stiff within three hours,” he said.

Investment in asphalt production is profitable since the state of Iranian roads is way below world standards. Asphalt production itself in Iran is 60% below standards and has the potential to improve by 20% within a year.

To set up an asphalt producing factory, around 70% of the initial investment should be spent on purchasing machinery.

Kiyanian also said the volume of production and quality of output are the two main factors that determine the amount of investment needed.

“The amount of investment starts from 8 billion rials ($266,667) to 30 billion rials ($1 million). Iranian industrial machines are of favorable quality, but you can use foreign machinery as well. Also, 15 workers are needed to run the factory. To secure the permits, you need to contact the Ministry of Industries, Mining and Trade,” he said.

Kiyanian and Samali are optimistic about the future of asphalt market, but are skeptical about handing over road construction projects to foreign investors.