Iran, one of the largest producer of crude steel in MENA region has produced around 10.50 MnT of crude steel in CY’18 (Jan-May’18). Iranian steel industry is pushing ahead with its ambitious plan to become the world’s sixth largest steelmaker as per its 2025 Vision Plan.
New crude steel and raw material output capacity are being added every year and production is following a growing trend. On other hand there is a fear that US sanctions might hinder its expansion plan as majority of expansion project is supported by European companies.
Although European parties have assured Iran that the sanctions will not affect Iran’s trade relations with them and they are looking for a way to protect and compensate European companies that are dealing with Iran. European companies like SMS, Danieli, Sarralle and few other have been involved in Iran’s steel production and development projects since early 2016.
But the withdrawal of some foreign companies that was feared by US sanctions has shown that it might be possible that few other European companies might withdraw their project ahead or after the US sanctions. It is worth mentioning that the Italian government’s USD 1.8 Billion steel investment plan was stopped because of US sanctions.
Under these circumstances, if the cooperation with Europeans fails, Iran might turn to Chinese technology for steel and metal development projects.
Iran Major Port Expansion Ahead of New US Sanctions
With the recent re-imposition of US sanctions on Iran, the government of Iran has doubled down on development of the Chabahar Free Trade Zone. The Chabahar development project envisions a hub for manufactured goods with a focus on steel and petrochemicals.
A 2016 agreement between Iran and India to develop Chabahar just became operational earlier this month. India will invest $85 million, and India Ports Global Private Limited, a government instrumentality, will equip and manage two of the port’s terminals.
The development of the free trade zone will be accompanied by the industrial development the country’s southeastern Makran coast. If the Makran steel complex becomes operational, it will significantly increase the country’s steel production. Iran produced 22 MnT of steel in the year ended March 20, 2018, while Makran is anticipated to produce 10 million tons of steel in the next decade.
Rail Electrification by Russia in Iran likely to Speed Up
The project to electrify a railroad connecting the Iranian city of Garmsar in Semnan Province with Inche Borun near the border with Turkmenistan will double the maximum speed on the link, while its capacity will grow fourfold to 10 MnT per year, the head of Russian Railways Mr. Oleg Belozerov said.
The railroad stretches to Turkmenistan and Kazakhstan, linking Central Asia to the Persian Gulf and beyond. All this creates conditions for the growth of cargo turnover along the international transport corridor ‘North-South’ and intensification of economic relations in the Caspian region.
The International North-South Transport Corridor, a 7,200-km multimodal network of ship, rail and road routes, is a major transit route designed to facilitate the transportation of goods from Mumbai in India to Helsinki in Finland, using Iranian ports and railroads, which the Islamic Republic plans to connect to those of Azerbaijan and Russia.
The corridor will connect Iran with Russia’s Baltic ports and give Russia rail connectivity to both the Persian Gulf and the Indian rail network. This means goods could be carried from Mumbai to the Iranian port of Bandar Abbas and further to Baku. They could then pass across the Russian border into Astrakhan and then proceed to Moscow and St. Petersburg, before entering Europe.
Inputs Taken from Chilan Online, Financial Tribune and Global Trade Mag
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