Economy, Business And Markets

Raw Material Shortage Looms Over Steel Industry

Raw Material Shortage Looms Over Steel Industry Raw Material Shortage Looms Over Steel Industry

Shortage of iron ore, scrap iron and pellet is the main impediment to growth in the domestic steel industry and the realization of the targets set in the 20-Year Vision Plan (2005-25), an advisor to First Vice President Es’haq Jahangiri said.

Mostafa Moazzenzadeh explains that Iran’s scrap iron sources are running out, and unless the mineral exploration projects underway lead to new iron ore reserves, import of iron ore appears to be inevitable.

“Steel capacity expansion will no longer be economical if we start importing iron ore,” Eghtesad News quoted Moazzenzadeh as saying.

Iranian steel mills need 6 million tons of scrap metal per year to reach the 55-million-ton output target stipulated in the Vision Plan.

By using scrap iron, steelmakers can save on energy and raw material. It also has the added benefit of reduced pollution. Every ton of new steel made from scrap iron saves 1,115 kilograms of iron ore.

However, in the absence of scrap iron, steelmakers have no option but to resort to mineral reserves. But Iran’s iron ore riches, although sizable, is inadequate to meet the ambitious capacity expansion target.

Iran accounts for about 3% of the global iron ore reserves estimated at 4.5 billion tons.

Given the ministry’s iron ore concentrate and pellet production goals by 2025, Iran’s iron ore reserves will be depleted in less than 28 years, that is if iron ore producers manage to boost their current 30.4 million-ton capacity and maintain the output in a globally turbulent commodity market.

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 is also stipulated to rise to 48 million tons by 2018, 82 million tons by 2021 and 85 million tons by 2025.

All eyes are on Iranian Mines and Mining Industries Development and Renovation Organization’s mineral exploration projects. The organization undertook an operation in 2013 to explore over 250,000 square kilometers of the country’s area over a course of three years. More than 400 million tons of proven iron ore reserves have been discovered so far and the project is scheduled to conclude by the yearend.

Sangan Iron Ore Mine, located in Khorasan Razavi Province, is home to Iran’s largest and the world’s ninth largest iron ore reserves, estimated at about 1.2 billion tons. It has the capacity to produce 15 million tons of iron ore pellets and 17.5 million tons of concentrate annually, according to Ali Seddiqifar, managing director of Sangan Iron Ore Complex.

Currently, three iron ore concentrate production plants, each with production capacities of about 2.5 million tons per year, and a pellet plant with a 2.4-million-ton capacity are under construction in the region.