Despite the fact that Iran’s steel industry has changed significantly over the years of international isolation, the major transformation is still on the way as there is a bold plan to triple steel output to 55 million tons per year by 2025.
This, in its turn, will require large volumes of raw materials that are planned to be produced domestically, Metal Expert, a Ukraine-based provider of news and analysis on steel products and steelmaking raw materials industries, has forecast in a recent report dubbed “Iran in Focus”.
“To achieve this goal, Iran needs 159 million tons of iron ore,” Keyvan Jafar Tehrani, chairman of Iranian Iron Ore Producers and Exporters Association, said during the recent MENA billet import conference in Dubai.
In 2015, the country produced 36 million tons and exported 14 million tons of iron ore, while the highest production result was reached in 2013–56 million tons, with almost 24 million tons exported.
This means that even if the country reduces export to minimum, it will still need extra iron ore volumes to feed steelmaking needs.
“Unfortunately, currently only 10% of Iran’s area have been explored. Thus we offer a variety of opportunities for foreign investors for the next four years, worth $20 billion,” he added.
New Steel Making Facilities
Mines exploration is not the only segment offering greenfield opportunities, as steel output expansion requires new steelmaking facilities.
“Following the plan, pelletizing capacities should be increased from the current 24 million tons to around 90 million tons, sponge iron–from 26 million tons to 58 million tons,” Saghar Babaheydari, an analyst from Foolad Technic International Engineering Company, said at the Sixth Iranian Steel Market Conference.
Along with industry giants–Mobarakeh Steel Company, Esfahan Steel Company, Khouzestan Steel Company as well as other mills expanding and balancing their production facilities, there is a number of projects being built from scratch.
Among them are such large investment programs as Makran Steel Complex, Qeshm Steel Complex, Pars Kohan Diyar Persian Steel and Arvand Jahanara Steel Complex with total steelmaking capacity exceeding 10 million tons.
These opportunities, together with an expected facilitation of financing process, have already attracted the attention of world renowned equipment producers and technology suppliers, such as Danieli, SMS Group, Outotec and POSCO. Most of them rushed to sign equipment supply contracts after the removal of sanctions.
In late January, there was a deal signed with Danieli worth €5.7 billion for a 6 million-ton-per-year pelletizing plant–a €2-billion joint venture between international and Iranian investors called Persian Metallics, with the remaining €3.7 billion to be spent for the supply of machinery for steel and aluminum production.
Outotec Wins Major Contracts
Finnish Outotec has been awarded a major contract for a new 5 million tons per year iron ore pelletizing plant in Bafgh, Iran.
The German plant maker, SMS Group, plans to set up a service center in Iran this year to be accessible to its customers for plant repair and manufacture after-sales components locally. No details, however, on its facilities and location have been revealed.
Outotec has also been recently awarded a contract by Shangdong Province Metallurgical Engineering Company, known as SDM, for the delivery of process equipment to the Iron Concentrate Project Sangan in northeastern Iran. The Iranian Mines and Mining Industries Development & Renovation Organization owns the Sangan mines and SDM is their engineering partner. The contract value is approximately €10 million and the order has been booked in Outotec’s 2016 second quarter order intake.
Outotec’s scope of work includes the design and delivery of thickeners and filter presses as well as related installation supervision and commissioning services, including spare parts. The new iron processing plant will process annually 5 million tons of ore. The equipment will be delivered mostly during the second quarter of 2017.
“We are pleased to have been given the opportunity to deliver the main dewatering process equipment to the second phase of the Sangan Iron project. Our comprehensive portfolio of dewatering equipment enables us to tailor efficient and environmentally sound solutions and services for iron ore processing”, said Kalle Harkki, the head of Outotec’s minerals processing business unit.
Sangan region, dubbed “Iran’s Mineral Heaven”, is located in Khaf County of Khorasan Razavi Province about 300 kilometers southeast of Mashhad, and is home to a large number of mining projects. Apart from iron ore, gold, copper, lead, zinc and rare earths are among minerals discovered in the 12,000-square-kilometer zone so far.
Sangan Iron Ore Mine contains 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.
Real Winner
“It’s not a race, as that implies there would be only one winner. The real winner will be Iranian industry,” says Burkhard Dahmen, president and CEO of SMS Group.
Despite the booming announcements of new projects, financial situation in Iran still leaves much to be desired. According to recent reports, large European banks are still reluctant to enter into cooperation with Iran, fearing fines from the US, which leaves an option for smaller banks mostly.
Under these conditions, some Iranian steel mills have to look for other opportunities rather than buying new equipment from European and Asian suppliers.
There is info circulating around the market that Iran’s Fasa Steel Complex, which is a greenfield project, is in talks with Pakistan’s Tuwairqi Steel Mills for the purchase of its idled 1.28-million-ton per year HBI plant.
Moreover, there are rumors that an Iranian mill is eager to buy an EAF from South Korean Dongbu. The name of the company is, however, not disclosed.
This is not the first time Iran makes a secondhand equipment purchase. Last September, Yazd Rolling Mill, a longs producer, bought a 400,000 ton-per-year pellet plant from a mill in Yazd province.
