Economy, Business And Markets

Steelmakers Stay on Track

Steelmakers Stay on Track Steelmakers Stay on Track

Iranian steel mills have realized close to half of the crude steel production capacity target set in the 20-Year National Vision Plan (2005-25), according to Iranian Mines and Mining Industries Development and Renovation Organization.

The plan stipulates Iran becoming the world’s sixth largest steelmaker by 2025 with a crude steel output capacity of 55 million tons.

According to studies conducted by Foolad Technic International Engineering Company, the plan entails the export of close to 21 million tons of the stated figure, with domestic demand standing at about 34 million tons, IMIDRO’s website reported.

Plans to develop the steel sector date back to 2004, during which the “Comprehensive Steel Plan” was laid out for the first time, with the aim of increasing domestic steel production capacity to 28 million tons per year by 2010.

Falling short of the target by about 4 million tons by the deadline, according to data from World Steel Association, officials in the Ministry of Industries, Mining and Trade, as well as those in IMIDRO, revised the plan and sought to streamline steel projects and attract domestic and foreign investments to reach a less ambitious target over an extended period of time.

Foolad Technic’s experts were part of the team involved in revising the comprehensive steel plan.

  Current Capacity

According to Minister of Industries, Mining and Trade Mohammad Reza Nematzadeh, the domestic steel industry’s production capacity currently stands at about 25 million tons per year, 17 million tons of which are being used.

The minister is sanguine that the figure can reach 50 million tons by the end of the current fiscal year (March 2017).

IMIDRO data show Iranian steel mills’ production capacity for crude steel and steel products reached 23.4 million tons and 34.1 million tons respectively by the end of the last Iranian year (March 2015-16).

Nematzadeh said after the establishment of a series of iron ore concentrate, pellet and sponge iron manufacturing plants over the past two years, more than 20 million tons were added to the domestic steelmaking capacity.

About 13.3 million tons of iron ore concentrate production capacity was also added last year, after the construction of concentrate plants at Zarand Iranian Steel Company, Sirjan Iranian Steel Company, Golgohar Mining and Industrial Complex, Foulad Caspian Company and Alborz Steel Company.

The industry, however, added only 1 million tons of pellet-making capacity last year, highlighting a serious shortage of the raw material.

Iron ore pellets are an enriched form of the metal shaped into balls and used as raw material for blast furnaces, which is used in integrated steelmaking, during which coke, iron ore and pellets react together under a hot air flow to form liquid hot metal, also called pig iron.

According to the roadmap set by the Industries Ministry, iron ore concentrate production capacity should reach 50 million tons by the end of 2018, 71 million tons by 2021 and 72 million tons by 2025.

Pellet-making capacity must also rise up to 48 million tons by 2018, 82 million by 2021 and 85 tons by 2025.

  Ongoing Projects and Challenges

Sangan region, dubbed “Iran’s mineral heaven” and “second Asalouyeh”, is located in the eastern Khorasan Razavi Province and home to a large number of mining projects.

For example, Ehya Sepahan Iron Mines Company’s iron ore concentrate production plant, which was inaugurated by the industries minister in June, is set to produce 900,000 tons of the industrial material every year.

Asalouyeh, located in the southern Bushehr Province, is home to the world’s largest natural gas field.

Other projects currently under construction in the region include Mobarakeh Steel Company’s iron ore concentrate and pellet plants, each with an annual production capacity of 5 million tons; Tose’e Melli Investment Group’s concentrate and pellet plants, each capable of producing 2.5 million tons per year; Kaveh Pars Mining Industries Development Company’s concentrate and pellet plants each with an annual capacity of 2.5 million tons and Khorasan Steel Company’s iron ore concentrate project with a 2.5-million-ton capacity.

According to Nematzadeh, the projects will come on stream by the end of the current Iranian year (March 20, 2017).

Overall, statistics indicate that 13.4 and 10 million tons of iron ore concentrate and pellet production capacity are expected to be added to the industry by the yearend, with pellet-making capacity still lagging behind.

Furthermore, last year witnessed a 23% surge in the number of construction permits issued for steel mills and its raw material production plants.

According to IRNA, permits for the production of 179 million tons of steel, 147 million tons of pellets and 131 million tons of iron ore concentrate were issued during the period.

Iran’s mineral riches, although substantial, could prove less than adequate to feed the grand capacity expansion target stipulated in the 20-year vision plan.

Iran accounts for about 3% of global iron ore reserves estimated at 4.5 billion tons. Considering the ministry’s envisioned concentrate and pellet production goals by 2025, Iran’s iron ore reserves will become depleted in less than 28 years, provided iron ore producers manage to boost their current 30.4 million-ton production capacity and maintain the output in a globally turbulent commodity market.

This is where IMIDRO’s mineral exploration projects could come to the rescue. The state-owned mineral holding undertook an operation in 2013 to explore more than 250,000 square kilometers of the country’s area over a course of three years.

This has led to the discovery of 400 million tons of iron ore, 500 million tons of coal, 90 tons of gold and 300 potential mineral zones. The exploration project is scheduled to conclude by the yearend.

If explorations fail to add to mineral reserves, the steadily rising steel capacity and the lagging raw material capacity expansion point to the inevitable necessity of importing raw minerals in the near future.