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German Firm Signs Deal  to Boost Iran Steel Output
German Firm Signs Deal  to Boost Iran Steel Output

German Firm Signs Deal to Boost Iran Steel Output

German Firm Signs Deal to Boost Iran Steel Output

German steel plant maker SMS Group has signed a $400 million contract to expand production at Iran’s Mobarakeh Steel Company but faces challenges in raising financing so there is no clear timeline for the work, Reuters reported, citing an SMS executive.

Iran, which produces about 16 million tons of steel a year, is seeking to boost production with help from foreign partners following a 2015 deal to limit the country’s nuclear program in return for an easing of international sanctions.

Tehran’s ambitions have alarmed European steelmakers as exports from Iran to Europe have reached 1 million tons a year, placing it third behind China and India. European producers have struggled against the competition

Mobarakeh produced 5.8 million tons of steel products in the financial year 2014/15, the latest report available on its website said. The firm’s exports reached 1.5 million tons.

SMS Group, a private firm that builds steel, aluminum and copper plants, signed the $400 million contract in February to build facilities that would add additional capacity of 3.5 million tons a year, with potential to rise to 5 million tons, said SMS managing board member, Dieter Rosenthal.

But he said it was not clear when the project would be implemented because of the difficulty of finding financing that does not conflict with US sanctions. Many US restrictions remain in place despite the nuclear deal.

The European Union is investigating alleged dumping of hot-rolled steel by several producers, including Iran.

Rosenthal said he expected Mobarakeh’s higher production to target the domestic market rather than exports, but analysts say Iranian demand has been held back by slower-than-expected economic gains since the 2015 nuclear deal.

Iranian Mines & Mining Industries Development and Renovation Organization did not respond to emailed requests for comment.

Germany is a major trading partner with Iran, reporting bilateral trade of €2.9 billion in 2016, up from €2.4 billion in 2015.

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