During the visit of President Hassan Rouhani and his accompanying high-ranking delegation to Italy last week, Danieli Group signed deals worth close to $6.2 billion with the Iranian Mines and Mining Industries Development and Renovation Organization for cooperation in the steel and aluminum sectors.
The visit marked the first made to Europe following the removal of sanctions imposed on Iran over its nuclear program.
The agreements signed in Rome by Danieli’s CEO Gianpietro Benedetti and the head of IMIDRO, Mehdi Karbasian, include a joint venture and the supply high-tech machinery and plants to a number of Iranian steel and aluminum companies, valued at $4 billion, IMIDRO reported on its website.
The joint venture includes establishing the joint “Persian Metallics” company in Iran by Danieli’s plant-making division with an initial investment of $2.18 billion by the Italian side. The construction process 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 finalized in four and a half years.
According to a report published on Danieli’s website, Persian Metallics will use iron ore and energy to produce about 6 million tons of pellets per year, intended for feeding direct reduction plants whose product is a raw material required for producing steel through melting by an electric arc furnace. This is the most environmentally friendly and arguably the most competitive method to manufacture steel today.
This will not only dramatically boost Iran’s steel output and reduce the industry’s environmental hazards, but will also enable the country to cut down on production costs and maintain its competitive edge in the global arenas.
Establishing steel and aluminum production facilities in Iran has many advantages, as energy costs are cheaper than in Europe.
According to IMIDRO, 235,000 engineers graduate from Iranian engineering faculties every year, meaning that the industries are well staffed with experts and skilled personnel.
The plant-making division of the Danieli Group, based in Buttrio, employs nearly 10,000 people and consists of various production lines active in the design, construction and startup of plants for the manufacture of steel and non-ferrous metals, with its services ranging from the treatment of ore and scrap to the melting, casting, rolling and finishing of a wide variety of finished, flat, long, forged and tubular products.
With its design centers located in the most important industrial hubs of Europe, the US and Japan, Danieli produces quality machinery at its own manufacturing plants in Italy, Germany, China, Thailand and India, according to the group’s website.
Based on the 2025 Vision Plan, Iran aims to produce 55 million tons of steel per year, which in turn requires the annual production of nearly 77 million tons of iron ore concentrates 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, close to 2 million tons of which were imported during the previous Iranian year (ended March 20, 2015).
Joint Production of Copper Anode
IMIDRO also signed an aluminum cooperation deal with the French Fives Group during the Iranian mission’s stay in Paris.
Signed by the giant engineering company’s chairman of the executive board, Frederic Sanchez, and head of IMIDRO, the agreement entails the establishment of a joint copper anode production company through an engineering, procurement, construction and finance contract.
Anode, primarily made from petroleum coke, is one of the main raw materials required for aluminum ingot production and its manufacture usually accounts for nearly 30% of production costs.
The anode production plant, with a production capacity of 450,000 tons per year, requires a close to $400 million investment and is IMIDRO’s largest initiative ever taken to expand Iran’s aluminum production capability.
Based on the Vision Plan, aluminum ingot production capacity is envisioned to reach up to 1.2 million tons per year, while Iran’s annual aluminum output currently stands at nearly 450,000 tons per year.
The Lille-based Fives Group, with headquarters in over 30 countries and nearly 8,000 employees, is a designer and supplier of machines, process equipment and production lines for the world’s largest industries, including aluminum, steel, glass, automotive, aerospace, logistics, cement, energy and sugar sectors, according to the group’s website.
Furthermore, a memorandum of understanding was signed by the Geological Survey of Iran and the French geological survey organization, Bureau de Recherches Géologiques et Minières on sharing experience and expertise in mineral exploration and exploitation as well as processing of rare earth elements.
