Iran Steel Mills Mull Consolidation to Spur Growth
Economy, Business And Markets

Iran Steel Mills Mull Consolidation to Spur Growth

Iranian steel manufacturers believe consolidation is the only way out of the ongoing recession, as they aim to boost steel exports.
Outdated technologies, high operational cost and lack of transportation and infrastructure networks are some of the major problems, Metal Expert, a Ukraine-based provider of news and analysis on steel products and raw materials industries, wrote in a recent report dubbed “Iran in Focus”.   
“The industry’s largest obstacle to growth is the myriad of steel plants operating at low, uneconomical production capacities, which is a waste of time, energy and resources,” Bahram Sobhani, CEO of Mobarakeh Steel Company, said.
Iran has a large number of steel factories with production capacities ranging from 30,000 to 6 million tons. Large mills are the drivers of the local steel industry, as they produced 88% of the total output in the last Iranian year (March 2015-16).
To optimize production, local mills have proposed creating a steel consortium. Six steel companies, namely Hormozgan Steel Company, Maad Koush Iron Ore Pelletizing Company, Maad Chemie Iron Ore Concentration Plant, Saba Steel Company, South Kaveh Steel Company and Pars Mining Industries Development Company, plan to form a consortium to produce 10 million tons of steel per year.
“The merger implies all the companies sharing the infrastructure: one railroad, one electricity source and one water treatment plant, which lead to a much lower cost,” he said.
Their merger would mark the industry’s first step toward the integration of steel operations for boosting productivity and exports.
“The implementation of the proposed plan will indicate the Iranian steel industry’s maturity,” he added.
Other beneficiaries of the steel industry’s integration are Middle Eastern and European buyers, which will have an opportunity to diversify supply and get access to commodities of appropriate quality and price.
“Iran is offering competitive prices for steel now and its range of products is diverse,” a buyer told Metal Expert.
The idea looks sound and viable, considering the successful example of South Korea, producing close to 70 million tons of steel, 90% of which are manufactured only by POSCO, Hyundai and Dongkuk Steel–all three formed either through merger or acquisition of other steel companies.
Nevertheless, experts believe this path poses a challenge to Iran.
“The proposed plan still lacks details concerning ownership, organizational structure and the capital expenditure of the final company,” said Mohammad Reza Daneshgar, an industry expert.


Short URL : http://goo.gl/HNsl3E
  1. http://goo.gl/zIxtAi
  • http://goo.gl/x0zevo
  • http://goo.gl/BXFxru
  • http://goo.gl/UjMIGN
  • http://goo.gl/8FXLzg

You can also read ...

At Tuesday's event, representatives from PwC hobnobbed with senior officials and business figures. - Photos by Saeed Ameri
PricewaterhouseCoopers, a leading multinational professional...
France Govt to Grant €70m for Development of Iranian Airports
The French Ministry for the Economy and Finance is planning to...
The busiest Iranian airport, Tehran’s International Mehrabad Airport, handles 400 daily flights on average.
An Iranian official said the country’s airport organization...
Melli Bank's Hong Kong Branch Restarts Operations
The Hong Kong branch of Melli Bank London PLC, a subsidiary of...
Production lines of Cherry ‘A5’ and ‘Qq’ along with Lifan X50 and X60 have been halted.
Production lines of four Chinese mid-range vehicles have been...
Fintechs Among Top Iranian Firms
No more than just a few years have passed since Iranian...
IKCO Says Planning  Green Cars
Iran Khodro says it will produce eco-friendly vehicles in the...
Steel production output capacity stands at 37 million tons, with long steel capacity accounting for more than 70%.
The government has turned to various experts for assessing the...