Economy, Domestic Economy

Steelmakers Move Forward With 10m-Ton Consortium Plan

Steelmakers Move Forward With 10m-Ton Consortium PlanSteelmakers Move Forward With 10m-Ton Consortium Plan

A number of Iranian steelmakers are planning to establish a steel consortium with a 10-million-ton production capacity in the Persian Gulf Mineral and Industrial Special Economic Zone in southern Iran.

The parties involved include Mobarakeh Steel Company, National Iranian Steel Company, South Kaveh Steel Company, Hormozgan Steel Company, Saba Steel Company and Madkosh Company.

The idea was first floated in December 2016 by NISCO and Foolad Technic International Engineering Company, the industry’s top think tank that has undertaken the feasibility studies of the project.

The establishment of the consortium requires a total of €5.61 million of investment, €1.5 million of which have already been attracted.

Lack of economies of scale has been one of the Iranian steel industry’s primary concerns, especially considering that the sector is following an aggressive expansion program to reach up to 55 million tons of capacity by the end of 2025.

Save from a few big names, most Iranian steelmakers are made up of private, small-scale producers with high production costs, rendering them uncompetitive in large international arenas. This is while Iran has set the target of exporting 20-25 million tons of steel by 2025 to render the capacity expansion feasible in the face of low local demand.

“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, the head of Mobarakeh Steel Company, has been quoted as saying, justifying the need for establishing the consortium.

“The implementation of the proposed plan will indicate the Iranian steel industry’s maturity,” he added.

Iran is currently the world’s 12th largest producer of steel by putting out 16.23 million tons since the beginning of January this year to the end of September, up nearly 30% year-over-year, according to the latest statistics by World Steel Association.

The country is the world’s largest direct-reduced iron producer with an output of 14.29 million tons during the nine months.

  Electric Arc Vs. Blast Furnace Steelmaking

The latest meeting held by producers on Sunday at the headquarters of the state-owned mineral holding Iranian Mines and Mining Industries Development and Renovation Organization brought them to consider two different scenarios to proceed with the project.

The first scenario entails establishing the 10-million-ton capacity by setting up a direct-reduced iron and electric arc furnace system. This requires the annual production of 18 million tons of pellets, 11.9 million tons of DRI and 10.8 million tons of EAF-made crude steel.

The second scenario is an equal split between EAF and blast furnace steelmaking. This one needs 17.2 million tons of pellet, 2 million tons of coke, 6 million tons of DRI, 5.3 million tons of cast iron, 5.3 million tons of EAF-made steel and an equal amount of blast furnace product.

Blast furnaces and EAF differ mostly in their raw material and energy requirements. In blast furnaces, iron ore is melted to produce pig iron, using coke as fuel. Then the carbon-rich pig iron is converted into steel by blowing oxygen through it. EAFs, on the other hand, melt scrap metal using electricity as the main source of energy.

The final 10 million tons of products will comprise 2 million tons of rails and H-beams, 1,000 tons of seamless pipes, 2 million tons of profiles, 2 million tons of wire rods and finally 4 million tons of strips.

Energy requirements for the first scenario, which was received more favorably by producers, stand at 7,579 square meters of water per hour, 582,600 cubic meters of gas and 1,919 megawatts of electricity.

Some of the producers involved have already launched the establishment of the infrastructure needed by the plants.

According to IMIDRO, there are currently two 2.5-million-ton pellet production plants under construction in PGSEZ, which are 78% and 20% complete respectively.

Furthermore, two 5-million-ton and 1.5-million-ton DRI plants, and two 2.7-million-ton steel mills are being established.


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