In the final days of Trump administration, the country’s government has imposed sanctions on key Chinese GE (Graphite electrodes) producer, Kaifeng Pingmei New Carbon Materials Technology Co., Ltd. (KFCC) for allegedly supplying thousands of metric tonne of material to Iranian steel companies between Dec’19 to Jun’20.
In addition, 3 agencies based in Germany, China and the UK of a major Iranian metals and mining company have been added to the list.
These measures have been imposed in accordance to Executive Order (E.O.) 13871, which levies sanctions on several sectors of the Iranian economy, including Iran’s steel sector, that continue to generate significant revenue for the Iranian regime.
Why sanctions have been imposed?
Chinese company Kaifeng Pingmei New Carbon Materials Technology Co., Ltd. (KFCC) is a leading manufacturer of carbon materials. As per the reports, along with supplying huge quantity of material in first six months of 2020 to Iran, KFCC also worked with an Iranian trading firm in mid-2020 and sold 300 metric tonne of graphite electrodes and miscellaneous equipment to Pasargad Steel Complex in Iran. The Pasargad Steel Complex is an Iranian steel manufacturer, operating a complex capable of producing 1.5 mn t of steel billets per year.
KFCC also has its presence in the Indian market as the company supplies UHP grade electrodes to the reputed Indian steel manufacturers having EAF units.
The implications
This imposition of sanctions by U.S. government means that KFCC is now not allowed to pursue any business and financial dealings in the U.S. In addition, any person, organisation or financial institution that is engaged in transactions with KFCC may themselves be also exposed to sanctions.
Chinese GE exports
Country’s customs data reveals that China exported about 0.30 mn t during Jan-Nov’20, down by 167% y-o-y basis. While there have been no direct GE exports to Iran from China, the same took place via other countries like Turkey, Oman, and Malaysia. Now with sanctions in place on KFCC, other Chinese firms will also be wary of making indirect exports to steel units in Iran.
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