81925
Crude steel production capacity in Iran is currently just above 30 million tons per year.
Crude steel production capacity in Iran is currently just above 30 million tons per year.

Iran Steel Industry Roadblocks Ahead

Iranian steelmakers aim to increase crude steel output capacity to 55 million tons by 2025

Iran Steel Industry Roadblocks Ahead

The Iranian steel industry’s path to its 2025 capacity expansion goals has proven to be a bumpy one, with new challenges surfacing every year.
Domestic steelmakers aim to increase crude steel output capacity to 55 million tons per year by the deadline as per the targets set in the 20-Year Vision Plan (2005-25).
“There are still many miles to go, as the industry has so far attained just over 30 million tons per year in capacity,” Minister of Industries, Mining and Trade Mohammad Shariatmadari said.
The government also has promises to keep, as it has committed to establish the required infrastructure for the steady raw material supply and transportation of exports.
For the last three years, Foolad Technic International Engineering Company has been studying the Iranian steel market and industry in a project called “Monitoring the Comprehensive Steel Plan.”
The plan was first floated in 2004 and integrated into the Fourth Five-Year Development Plan (2004-9) the following year. The plan was revised in 2007 under the title “Iran’s Industrial Development Strategy,” in which the 55-million-ton/year output target was first introduced.
The grand plan, however, faced more roadblocks than expected, leading to FIECO stepping in to monitor the industry and produce reports on its shortcomings.
FIECO’s latest analysis of the sector was presented on the second day of the 8th Iranian Steel Market Conference, otherwise known as ‘ISMC 2018’, which was hosted by Donya-e-Eqtesad media group last month.

 Raw Material Shortage
Iron ore shortage, which was the previous years’ main talking point, still looms large.
According to FIECO, Iran has 5 billion tons of estimated iron ore reserves and 3.1 billion tons of proven reserves.
The available amount will suffice for producing 55 million tons of crude steel per year. However, the main issue is sustaining the production figure post-2025.
FIECO’s forecast, based on the state of the steel market, holds that in the best-case scenario Iran will need about 1.1 billion tons of ore by 2025, that is if steelmakers utilize up to 85% of their capacity. The remaining reserves would be adequate for feeding the industry for only 15 years.
However, a more realistic forecast based on Iran’s chronic capacity underutilization would be plants using 65-75% of their installed capacity, which would require 960 and 830 million tons of ore respectively. In that case, reserves would respectively last 18 and 22 years.
The government has identified the shortcoming with the state-owned holding Iranian Mines and Mining Industries Development and Renovation Organization, along with Iran Minerals Production and Supply Company currently conducting exploration operations in 27 mineral zones across the country.
Results have been less than stellar for now, however, as underfunding and private sector’s hesitance to enter exploration have hindered the process.
FIECO believes Iran must produce 154 million tons of iron ore and 80 million tons of concentrate every year post-2025. Realizing that requires a few things:
* Increased investment in exploration, especially deep underground exploration in which Iran still has trouble due to lack of required technology. The lifting of nuclear sanctions back in 2016 was expected to help the sector import new technology and court prominent international firms to help. Yet lingering secondary US sanctions have kept things out of reach.
* Attracting local and foreign investors to expand iron ore production chain. The issue of sanctions holds true here, too. And the government’s lack of consistent policymaking has also kept away local investors.
* Addressing the 9-million-ton iron ore concentrate output deficit by 2025, which would most probably require starting imports and developing the country’s inadequate port infrastructure.
* Iran could also come up with new methods for beneficiation of low-content iron ore to make use of its limited reserves. Iran’s average ore content is about 46%.
* The government can help finance small- and medium-scale miners to establishing concentrate plants in close proximity to iron ore mines, for lowering costs and boosting economies of scale.
* As a last resort, the government could invest in or purchase iron ore mines in ore-rich countries to sustain the industry feedstock. If so, steelmakers located on Iran’s southern coast would highly benefit due to lower transportation costs.

 Underdeveloped Transportation
The next bottleneck is the underdeveloped transportation sector, which is unequipped to transport the 2025 capacity.
The rail transportation system, according to FIECO, should be able to carry 105 million tons of downstream and upstream steel products by 2025, including 16 million tons of iron ore, 4 million tons of coal, 32 million tons of iron ore concentrate, 31 million tons of pellet, 5 million tons of direct-reduced iron and 17 million tons of steel products.
This is while Iran’s current total rail transportation capacity is about 40 million tons, and 28 million specifically for steel products. The total figure must increase to 202 million tons and 105 million tons for steel products by 2025.
Besides the issue of transportation volume, there is also the limited area covered by the railroad system.
The national rail network spanned 13,000 kilometers by the end of the last fiscal year (March 2016-17). The figure needs to reach 25,000 kilometers by the end of 2025. 
Road transportation, on the other hand, is capable of transporting a total of 388 million tons, 66 tons of which are mineral products. The total capacity should reach 457 million tons by 2025, 85 million of which are meant for steel products.
Iran’s maritime transportation, the most convenient form of transportation for steelmakers located in the southern parts of the country, is capable of moving a total of 145 million tons of goods with mineral products constituting 31 million. It needs to reach 210 million tons by 2025, 50 million of which are for steel products.
Development of railroad, road and maritime transportation, according to FIECO, requires €4.8 billion, €1.3 billion and €560 million of investment respectively.
Some of the issues holding back transportation development include lack of proper investment, higher cost of rail transportation compared to road due to subsidized fuel costs, and lingering sanctions raising costs for maritime routes.
“Our railroads do not have the required capacity for transporting all our mineral products, and loading and unloading limitations at docks that cannot handle over 30,000-ton ships increase our final prices. We are not able to compete [internationally] even though we have cheaper energy costs,” IMIDRO chief Mehdi Karbasian was quoted as saying in August.

Short URL : https://goo.gl/eHXMGr
  1. https://goo.gl/XxmgVx
  • https://goo.gl/4hXggq
  • https://goo.gl/5Zz1et
  • https://goo.gl/xtACpg
  • https://goo.gl/e4Tngq

You can also read ...

Turkey Determined to Protect Companies From US Sanctions
Turkey will take every initiative to protect its companies...
Tesla’s Gigafactory in Nevada, the US
Tesla Inc has flown six planes full of robots and equipment...
Westminster Group Hopeful Over Iran Airport Security Deal
UK-based company Westminster Group PLC is still hopeful it can...
Fiat Chrysler Recalls 4.8m Vehicles
Fiat Chrysler is warning the owners of approximately 4.8...
Head of Sistan-Baluchestan’s Ports and Maritime Organization Behrouz Aghaei (L) shakes hands with Managing Director of Life Trade Promotion Company Mohammad Arazesh after signing the agreement on May 23.
Life Trade Promotion Company signed an agreement with Sistan-...
Further Hike in Unified USD Rate
The Central Bank of Iran has increased the US dollar's...
CBI: Inflation at 9.1%
The average goods and services Consumer Price Index for urban...
About 60% of the total volume of NPLs in Iran are considered irrecoverable.
Iranian banks and credit institutions held a total of about 1....

Add new comment

Read our comment policy before posting your viewpoints

Trending

Googleplus