Iran is advancing a massive steelmaking project being promoted as the country’s “South Pars” of the steel industry.
Sangan, the biggest industrial project in Iran’s east, will produce 17.5 million metric tons of iron ore concentrates and 15 million tons of pellets a year.
An initial investment of $2 billion is planned in the region which is estimated to hold 1.2 billion metric tons of iron ore.
Deputy Minister of Industry, Mine and Trade Mehdi Karbasian says further discoveries are expected to increase reserves by 50-100% given “many promising signs which we have seen”.
For both concentration and pelletizing, nine production units have been designed which will lead to a transformational change in the regional economy and bring about development and employment to the local residents, he said.
Sangan, near the border with Afghanistan in Iran’s Khorasan Razavi province, is an underdeveloped backcountry. It is already seeing development rolling on its way, as new roads are being paved, a rail track is laid and water brought to its doorsteps.
Karbasian said the project will create a robust downstream chain. "In the Sangan region, it is the soil which will find added value and generate dollars.”
Some of the purchases for the plants have been made from Italian foundry equipment maker Danieli SpA before the Europeans intensified sanctions on Iran.
For now, five domestic consortiums and another consortium comprised of two Chinese and four Iranian firms have undertaken to provide investment.
Iran’s biggest mill, also the Middle East’s largest, is currently Mobarakeh Steel Company which produces 7.2 million metric tons of steel per year.
There are also several private steel plants, each under 100,000-ton capacity, scattered around the country.
Iran plans to quadruple steel production to 55 million tons a year by 2025 to keep pace with demand in its industry and an economy being billed as one of the emerging Next Eleven.
Steel is a strategic commodity for the country of about 80 million. It is crucial to Iran’s massive oil and gas industry, its automotive sector which is the Middle East’s largest as well as its transportation and water supply networks, urban centers and a mammoth construction sector and its employment.
Karbasian said Iran is currently the world’s 10th country in terms of mineral deposits but it can improve the ranking with more discoveries as many fields have never been examined yet.
“To put it into perspective, discoveries have been made only on 100,000 km of the country’s 1.6 million km mineral fields,” he said.
“Iran is among the world's top countries in terms of gas and oil reserves; while those reserves are running out, the Sangan iron ore mine is being described as the second Assaluyeh which contains many job opportunities and unique potentials for foreign exchange earning and development,” Karbasian added.
South Pars is the world’s largest gas field near the Iranian city of Assaluyeh which the country develops in over two dozen phases.