An Indian state company has agreed to sell high-quality iron pellets to Iran, in what could be a $200 million annual deal that signifies expanding business ties between the countries, as sanctions against Tehran ease.
India had remained one of Iran’s top oil buyers in sanctions years and the two countries are now exploring partnerships worth billions of dollars in ports, steel, aluminum and power, Reuters reported.
Iran and India started talks on the pellet deal even before the United States, European Union and United Nations earlier this month agreed to lift sanctions on Iran.
KIOCL Ltd, owned by India’s Steel Ministry, could sell as much as 2 million tons of pellets to Iran to meet substantial local demand, Chairman Malay Chatterjee said.
Keyvan Ja’fari Tehrani, head of international affairs at the Iranian Iron Ore Producers and Exporters Association, said a final agreement was yet to be struck. But he agreed the demand was there.
“The production of pellets in Iran is not sufficient,” Tehrani said, adding there is a need to import between 7 and 8 million tons a year. Iran produced 21 million tons of iron pellets last year while demand reached 28 to 29 million tons, he said.
KIOCL has been in talks with Tehrani as well as Iran’s state-owned mines and metal holding company IMIDRO, said Tehrani.
Negotiations are also going on to bring in 1 million tons of low-quality iron ore from Iran, process it at KIOCL’s coastal facilities in India, then export pellets to Iran, said Chatterjee.
A senior steel ministry official confirmed the talks.
KIOCL will initially buy 80,000 tons of high-grade concentrate containing 67 percent iron from Anglo America’s Brazil operations by September, convert it into pellets and then sell to Iran for about 500 million rupees ($7.8 million), Chatterjee said.
Based on that figure, the value of a 2-million-ton deal would be about $200 million.
Most of Iran’s iron ore is low grade and needs to be converted to pellets to be used to make steel. The country is targeting annual steel output of 55 million tons by 2025, up from about 16 million tons.
South Korea’s POSCO, the world’s fifth biggest steelmaker, said earlier it had been in touch with several Iranian firms seeking to do business after sanctions were lifted.
