overview of the iranian iron and steel markets -...

Overview of the Iranian Iron and Steel Markets Dr. Mehdi Karbasian (Deputy Minister and Chairman of IMIDRO)

Iran Mines and Mining Industries Development and Renovation Organization

December 2014 Final Version

18th Middle East Iron and Steel Conference

Dubai, U.A.E - 8 - 10 December 2014

About IMIDRO (Iran Mines and Mineral Industrial Development and Renovation Org)

• IMIDRO Established 12years ago by merging the Ministry of Mines andMetals and Ministry of Industry to reduce Government size and bureaucracy.Our Mission is to develop and support Mine and Mining Industries Projectsand companies in Iran.

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IMIDRO is a Governmental Organization and Ranked As a DevelopingOrganization in Iran by Law.

IMID

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History

69 Project Constructed

(Mining, Steel, Zinc, Copper, Aluminum, Gold , Infrastructure…)

17 B$ Investment

70.000 Jobs created

Future

29 project under development

Total Current investment of 9B$

)Steel, Zinc, Copper, Aluminium, Gold, Magnesium…)

Supply Chain of Iron and Steel Sector in Iran

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Iron and Steel Sector in IranIRAN Iron Ore

14th in world Ranking, with a Reserve of 2.5 Billion TonsConcentrate Iron Ore

Current Production: 24 Million Ton

Target for 2025: 66.2 Million Ton

Pelletizing Plant


Target for 2025: 82.8 million Ton

DRI (Direct Reduced Iron)



Crude Steel from EAF

Current Production: 14 Million ton

Target for 2025: 46.1 Million ton

Lump and Fine Iron Ore


Export: 24 Million Ton

Pig Iron (BOF)

Current Production: 2.2 Million Ton


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Total Crude SteelCurrent Production: 16 Million Ton

Target for 2025: 52 Million Ton

Due to availability of Nat Gas, More than 85% of steel production in Iran is based on EAF technology

IMIDRO Strategies Focused on Development along with competitiveness of Iran Mining Sector

IMIDRO Strategies on Mining Sector

To increase the share of Private sector in

Mining and Infrastructure

To increase mining activities in un-

developed area of Iran

To promote investment in related International

Projects

Productivity

Project Funding Supportknow-how and

technology developmentMarketing

support and Export

development

To invest in Hi-Tech and Hi-Risk sector of Mining

Business

Human Resources

Development

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Outlook for Iran Steel and DRI Consumption

• Middle East annual consumption of steel is 76 Millionton and with a share of 25%, Iran ranked 2nd inSteel consumption in Middle East after Turkey (35%).

• Recent studies shows Iran Crude Steel Consumptionwill reach to more than 46 million ton in 2025.Additionally there are an export marketopportunities for 6 million ton mainly in Middle Eastand EU countries which means Iranian Crude SteelProduction could reach to 52 Million ton.

• Most of Projects up to that level defined andcurrently under developments and there are manyinvestment opportunities for foreign investors onthose.

• Most of Steel making projects under development inIran uses DRI-EAF technology. Current production ofDRI in Iran is 16 million ton which will reach tonumber 1 in world ranking in production of DRI (56Million ton in 2025)

46,341

22,000

27,000

32,000

37,000

42,000

47,000

100

0 x

To

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Iran Steel Consumption 2025 – Different Scenario

IranSaudiArabia

UAE Qatar Oman Bahrain Iraq

2019 40000 1090 1289 80 40 1550 800

2012 16,000 5,660 2,720 2,420 1,460

-

10,000

20,000

30,000

40,000

50,000

60,000

Current DRI Capacity and additional Expansion till 2019

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Why Steel production in Iran is so competitive?

Access to Raw Materials from Eastern and Northern Neighbors with No direct access to Sea (Afghanistan and CIS Countries)

South Pars Field, largest Nat gas Storage

• Skill workers and Experienced Companies

• Big Local Market =25% Middle East

• Big Consumption in Neighbors

• Suitable Road and Rail Network

• Suitable Infrastructure

• Special Economic zone (Tax free)

• Security is one of the best in Middle East

Rich Iron Ore Mines in Eastern/Central Part- Open Pit - 2.7 Billion Ton of reserve

Afghanistan resources (1000 B$) and opportunity for Iran Chabahar as new raw material HUB

Crude Steel production Cost Per Ton: 280-320 US$, Margin around 27% of Sales

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7Iran has a Long Sea Border

Iran Iron Ore Mines Shown in the map

Outlook for Iron Ore Concentrate and Pellet (52 Million ton of Steel)

• Iranian companies already defined most of the steel projects to reach to 52 million ton to supply demand in 2025.

• By considering above, there are still un-balances in supply chain and opportunity for definition of new projects including up to 19 million ton in Concentrate Iron ore.

• Additionally, IMIDRO should increase Iron Ore Exploration and up to 23 Million Ton of Exploitation.

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23 2

7 29

56

35

63

37

5958

90

66

116

57

86

86

138

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-23

-40

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20

40

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80

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120

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Supply/Demand BalanceCurrent Production projects Under Construction Total in 2025 Required Balance

For Exploration of new resources,IMIDRO will invest up to 500 Million US$in the next 5 years to define and finalizenew deposits.

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Iron Ore Mine Reserve and Ownership• Iron ore exploitation grow by more

than 6 times during the past 10 yearsand reached to 51 Million Ton.Average grade for Iranian Iron ore is51% which 95% of them are mainlyMagnetite and mainly located inEastern Part of the country , Mainly inYazd , Kerman and KhorasanProvinces.

• Currently Iran operating 156 Iron Oremines)5% of them with a reserve 86%of the country reserve controlled byIMIDRO).

• IMIDRO Biggest mines are including:

Sangan with a reserve of 1.2 Billion Ton(Ranked as 9th in the world)

Gole Gohar with 1 Billion Ton (Ranked as10th in the world)

Chadormalu with 0.2 Billion Tone

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4.4

1.8 2.8

0

5

10

15

20

25

30

35

40

45

50

Iran Turkey Oman Bahrain kuwait Lebenan Qatar

MIDDLE EAST IRON ORE AND PELLET PRODUCTION - 2012 (MILLION TON )

Iron Ore Pellet

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Mine Production Costs: 16-25 US$/Ton (one of the best practices in the world)

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Investment Opportunities and Incentives Iron and Steel Sector

Exploration-Mining and Processing-Steel Plant and Related Products

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Incentives for Foreign and Private Sector investment

• IMIDRO is promoting foreign and private investment in the projects in Mining and Metal projects and has the following incentives for investors.

• To support the project, IMIDRO is willing to participate as a partner for foreign investor, if required

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Incentives Mining Exploration

Mineprojects

Mining Industries

long term contract for Exploration, Extraction, Processing, Marketing

Support for allocation of loan from Iran Oil Fund for part of investment

Required permits from Authority

long term contract for raw material supply

Allocate Land in Special Economic Zone (Tax Free…)

To Provide infrastructures required in SEZ

Reserve Sharing Contract after Exploration

Possible IMIDRO participation as shareholder in J.V Company

Exploration Risk Insurance by Government

FIPPA Coverage

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Investment Opportunity for Mine Exploration

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Exploration Projects and Opportunities for Partnership and Reserve Sharing

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Province AreaKhorasan-Sangan 11500

Sistan –Baluchistan-Border line 15000Sistan –Baluchistan-Caravan 14300South Khorasan-Border line 6116

Fars-Bahram Goor 5000Ardebil-Ghezelozan-Khalkhal 1351

Kerman-Hormozgan-Sirjan 30000Ardebil-Sabalan 1696

Ardebil-Baghrodagh 874Yazd-Bafgh-Robat 10558

West Azarbaijan-Khoi-Maako 1218West AzarbaijanTakab-Piranshahr 5135Kohkelooyeh-Boyerahmad 1006

Total Area (Km2) 103754

3 years Planned Land Resource = 200,000 Km2

Activities: Airborne hyper spectral sensors for geological projects

Geology 50000 Km2 + Border area Wide: 20 Km

Planned drilling for 2014: 100,000 Meter

Ardebil

GolestanYazd-Isfahan

Yazd-Robat

Kerman(Sirjan-Fariab)

Sistan-BaluBorder

Saravan

Golestan

Kerman ShahKohkelooyeh-Boyerahmad

Piran Shahr

N.Kordestan

S.Kordestan

Sangan

Khorasan Border

FarsBahram Goor

Investment Opportunities in IMIDRO Mining Sector

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Investment Opportunity in Coal Mining and Related Processing Plant

AreaZone

ReserveMillion

Ton

Proven Reserve

Project Designed Capacity

Invest.

Parvade4Tabas

S.Khorasan

250 40 Mine Development+Related Equipment+a Plant to produce Concentrate coal

450,000 Concentrate Coal

101 M Euro

KhomroodKerman

100 31.5 Mine Development+Related Equipment+a Plant to produce Concentrate coal

400,000Concentrate Coal

123 M$

SavadkoohMazandaran

50.5 10 Kordabad Mine Development+RelatedEquipment's

230,000Raw Coal

37 M$

Coking Coal Plant in Savadkooh 300,000Coke

86 M Euro

Total Investment in Coal mining and Related Processing Plant 400 M$

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Investment Opportunity in Steel and related Industries

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Plant Location Project Inves.Chabahar Steel Plant Located in Chabahar Free trade zone

5 Million Ton Steelmaking Plant + 1000 MW Power Plant

3.15 B$

Natural Gas now reached to Pakistan Border and Raw Material output from Afghanistan mines are increasing with a big portion of them to be exported via Chabahar Port.There are unique opportunity of investment for an steelmaking plant using Nat Gas from Iran along with Iron ores from Iran and Afghanistan. Most of Infrastructures required for the project already available or under development

Bandar Abbas-2 Steel Plant Located PGSEZ

1.6 Million Ton Steelmaking Plant 800 M$

The government and private sectors made a big investment in PGSEZ during past 10 years. Now this SEZ productizing annually 1.6 Million Ton of Steel, 200,000 Ton of Aluminum and other Mining industries products like Zinc, DRI for export or local consumptions.PGSEZ located close to sea and has most of infrastructures required for this new project already available at site including railway, Nat Gas, A 12 Million ton of Jetty (6 million ton operation, the rest by end of 2015) for import and export of raw material. 2 Power Plant (1000 MW) under construction to provide necessary electricity for industrial plants currently under operations.

Assaluyeh Steel Plant Located in PSEZ (Parsian SEZ)

1.6 Million Ton Steelmaking Plant 800 M$

South Pars Field is world biggest Natural Gas Storage with total reserve of 51 trillion cubic metres. To be able to use the natural gas, IMIDRO intend to produce mineral industries which raked as Energy Intensive Products like Aluminium, Steel and Cement and … in PSEZ which located close to sea. Nat gas already available and a Jetty with a capacity of 15 Million Ton already planned and studied.

Total Investment Opportunity4.75 B$

Chabahar Steel PlantBandarAbbas-2

Steel Plant

AssaluyehSteel Plant

Other Investment Opportunity (Graphite Electrode, Titanium oxide and Power Plant)

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Plant / Location Capacity Inves.Kahnoj Titanium Project- Southern Kerman 130,000 Ton Concentrate

+ 70,000 Pigment103 M$

The Mine is one of the world biggest Titanium Mine with a reserve of 150 Proven Million Ton and is excellent from economical view (Internal rate of Return). Graphite Electrode for Steelmaking process (EAF) -Ardakan, Yazd 30,000 ton 300 M$Every Ton of Steel in Iran normally use between 2 to 2.5 Kg of Electrode. Iran now producing up to 14 Million ton of Steel using EAF method which means an annual consumption of 32000 ton of Graphite Electrode, while the production of steel will increase to its outlook (52 Million Ton), Demand for Graphite electrode will reach to 100,000 Ton. The Ardakan Plant is under construction in partnership with Steel Makers and IMIDRO and there is unique opportunity for foreign investors to involve as technology and machinery provider or financer.Power Plant - Bandar Abbas 2 , Hormozgan 500 MW 260 M EuroA lot of industries currently under operation (HOSCO, Almahdi …) or construction (HOSCO 2, Almahdi 3, Saba Foolad, Kaveh…)in SEZ in Bandar abbas. As they come to operation, They need a huge power where this project will provide electricity for a portion of future demands.IMIDRO is willing to sign the contract with interested partners based on BOO or BOT for this project.Power Plant - Parsian , Hormozgan 500 MW 260 M EuroDue to Availability of Nat Gas in Assaluyeh, IMIDRO Established a SEZ for Energy Intensity Products Like Steel and Aluminum in Parsian. As an incentive, IMIDRO also provide infrastructures for investors if required including power and water and Jetty. We guarantee the market for investors in infrastructures and purchase the products (electricity, water …) in advance.IMIDRO is willing to sign the contract with interested partners based on BOO or BOT for this project.

Total investment: 1050 M $

Iron and Steel Challenges • Water Shortage

Due to Very Long Dry Seasons, Water Shortage is the main challenges for Steel Industries in Iran. As a result, most of expansion and New Steel Projects have been moved to the south of the country close to Sea

• Transportation

Railway Tariff for Iron Ore is higher than our international competitors and need to be down by 20%

Jetty Capacity need to be expanded, Make it Available to receive Ships with Bigger Sizes (Panamax and Cap Size)

• Other changes

Global Steel Overcapacity had driven down prices: Ernst & Young estimates global overcapacity at 479 million metric Tons!!! This brought the price down and create the Challenges for Steelmakers as well as Iron Ore suppliers.

Low Added Value of Steel Industry compare to our international competitors (need to move to more Hi-Tech steel products)

Technology and Productivity

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For More Information about IMIDRO Projects in Steel Sector or Other Sectors, Please visit us at www.Imidro.gov.ir

Also you are warmly welcome to visit us at our Head office: No.43, Sepahbod Qarani Ave. Tehran, Iran

Contact Person: Mr. Mohammad Taheri, Head of International AffairPhone: +98-21- 888 29 181Fax: +98-21- 888 42854Email: [email protected]

THANK YOU!

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Related conferences in Mining Sector in Iran (Including Iron and Steel industries)

1- 5th ISMIC Iran Steel Market Conference, 27 and 28 of January 2015 ,Tehran www.events.den.ir

2- IMIS Iran Mine and Mining Industries Summit, 1 May 2015, Iran www.imis2014.com

http://www.imidro.gov.ir/

mailto:[email protected]

http://www.events.den.ir/

http://www.imis2014.com/

overview of the iranian iron and steel markets -...

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