(Minews) - Oil and gas and their derivatives constitute the lifeline of Iran’s economy but the key driver of the country’s growth is the steel industry which is growing by leaps and bounds.
Iran plans to quadruple steel production to 55 million tons a year by 2025 in the face of sanctions in order to keep pace with its growing economy -- one of the Next Eleven candidates to become the world’s largest in the 21th century.
The country is the largest steelmaker in the Middle East and North Africa.
According to the Global Steel Association, cited by the Fars news agency, Iran produced 2.27 million tons of steel in the first two months of this year, up 15.6% on the same period the year before.
Steel output by Iran totaled 16.33 million tons in 2014, securing the country’s place as the 15th largest producer in the world.
Steel is a strategic commodity for the country of 75 million, which is also the Middle East’s biggest carmaker. It is fundamental to the Iranian society with its massive oil and gas industry, transportation network, water supply, urban centers and mammoth construction.
Iran’s steel imports, put around 10 million tons a year in some reports, roundly outweigh its exports.
The steel sector in Iran is under growing threat of dumping by China, Russia and Turkey. The government has imposed tariffs of 10 to 20 percent and cancelled foreign currency offers at preferential rates on imports in order to protect the sector.
But the industry still faces enormous challenges to stay competitive. One drawback is the high cost of iron ore production in Iran compared with the outside world.
According to Iranian entrepreneurs, the sector is generating little value-added while imports are more viable.
Head of the Iranian Steel Manufacturers Association Bahram Sobhani says one key problem lies where the size of production units is concerned.
“It is unfathomable that instead of establishing units with a capacity above five million tons, we have built small- and medium-size plants,” he says.
Iran’s biggest mill, also the Middle East’s largest, is Mobarakeh Steel Company which produces 7.2 million metric tons of steel per year.
Most of Iran’s private steel plants, with a capacity under 100,000 tons, are scattered across the country.
Sobhani also says Iran’s vision plan to quadruple steel output within a decade is overambitious.
“Given that some eight years have elapsed since the plan was first devised, without any delightful development having occurred in the steel sector, it is impossible to achieve this target,” said the official, who is also the CEO of Mobarakeh Steel Company.
But state officials are sanguine.
Mehdi Karbasian, deputy minister of industry, mine and trade, says dozens of foreign entities have indicated their interest to invest in Iran’s steel sector, including the Europeans and the Chinese.
“We are in serious negotiations with the Kazakhs for cooperation in the steel, iron ore, zinc and aluminum sector which will have very good results if they become operational,” he said.
“Meanwhile, the Indians have announced their readiness for investment and their operation is to start imminently,” Karbasian added.
