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Iran aims for self-sufficiency in steel by 2014

Producers say sanctions not biting, experts see delays.

December 15, 2010 4:13 by



Iran, the largest importer of steel in the Middle East, is pressing ahead with plans to expand output capacity to achieve self-sufficiency by 2014 and then boost it fivefold by 2025, a conference heard on Wednesday.

Around $32 billion of investment was needed for the country’s long-term goal to reach a steel capacity of 55 million tonnes from 11 million tonnes now, an executive from state-owned Esfahan Steel Company told the Metal Bulletin’s steel and iron ore conference.

“(Steel) industry is growing fast to fill the growing gap between supply and demand,” Mansour Yazdizadeh, sales and marketing deputy at the company said. “I think our steel industry has to find international allies and new investment.”

But experts said obtaining financing for Iran’s steel expansion projects looked difficult as U.S.-led international sanctions had prompted many firms to halt business with Tehran.

“Around $14 billion worth of steel projects are currently under way but some face delays or cancellation due to the U.S. sanctions and increasing manpower costs,” Hadi Hami, Middle East steel specialist in the Alam Steel Group said.

Pressured by international sanctions imposed over its disputed nuclear programme, Iran puts a brave face and has repeatedly said the sanctions have had no negative impact on its industries or trade business.

During this week’s steel conference in Dubai, Iranian producers echoed the official line, saying Iran did not have problems obtaining financing and many foreign firms were still keen to do business with the Islamic Republic.

“Sanctions is not a new matter for Iran,” Yazdizadeh said. “We have been living with the sanctions for the past 30 years.”

“There are many countries like Japan, Korea, Australia, who are currently implementing projects in our country,” he said, but did not say which companies were involved.

EXPANDING PRODUCTION CAPACITY

Iranian National Steel Industrial Group (INSIG), which was privatised more than a year ago, also plans to double its production capacity in the next three years.

Its managing director, Abdolreza Rasouli, said the expansion will cost about $500 million and the company had already secured the financing needed, partly through loans from local banks.

“We have the habit of continuing our business with local contracts and local banks,” Rasouli said, adding the projects would bring the company’s capacity to more than 3.1 million tonnes a year, from the current 1.5 million tonnes.

He added INSIG was in talks with Chinese and Italian companies to cooperate in technology.

Rising population and growing housing needs estimated at 1 million new homes every year meant Iran’s steel demand was set to grow well above the average rate in the region, experts said.

“Construction sector grew by 11 percent in 2008, before the crisis,” Hami said. “It will grow by 3 percent in 2010, after expanding 1.5 percent in 2009,” he added.

(Editing by James Jukwey)



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