Iran: Steel Industry Overview

The establishment of iron and steel plants in Iran has been in the mind of the country’s government since the early decade of the 20th century. The first serious attempt was made in late 1930s with the assistance of German companies. But the outbreak of the World War II brought the construction works to standstill and the project was never completed.
Almost two decades after the World War II due to recovery in economic situation and increasing demand for steel products, the establishing of a steel plant was brought up again.

At this juncture a rolling mill was erected by private sector, INSIG (Iran National Steel Industries Group) to produce structural steel by rolling imported semi-finished steel products. INSIG also constructed a steel making shop (Electric Arc Furnace and continuous casting) to produce semis by melting steel scrap.

Parallel with the private sector’s activities, an inter-governmental contract was concluded between the governments of USSR and Iran to transfer the natural gas from Iran to the former USSR. In exchange for heavy industry, a steel making shop with annual capacity of 550,000 tons in Esfahan was included.

For this purpose, National Iranian Steel Corporation was established for construction of the plant and mobilization of the relevant mines such as iron ore, coking coal, limestone, refractory , etc. The plant was successfully commissioned and came into operation in 1971.
Subsequently, a contract for expansion of Esfahan Steel Plant to a capacity of 1.9 million tons/year of structural steel was signed with the previous supplier.

After a few years of operation, both the private sector furnaces and Esfahan Steel Plant were facing some problems such as shortage of scrap and quality coking coal.
These two problems on one side, and the following aspects on the other side:
-Increasing domestic demand for Iron and steel,
-Huge available resources of natural gas and required raw materials, in particular, iron ore,
-Relative Iranian expertise in iron and steel industry,
-Introduction of new methods of Direct Reduction Process in industrial and commercial scales,
contributed to establishment of another state-owned company under the title of National Iranian Steel Industries Company (NISCO) in mid-1970 to produce iron and steel products by utilizing Direct Reduction process as well as to mobilize the relevant iron ore mines.

To accomplish this, two contracts were signed between NISCO and foreign companies to construct two integrated steel mills in Bandar Abbas and Ahvaz and a heavy rolling mill in Ahvaz.

After the Islamic Revolution in 1979, fundamental changes took place in the Iranian Steel Industry Organization. The two  state-owned companies were merged and NISCO affiliated to the former Ministry of Mine and Metals and Ministry of Industry and Mine was established.

NISCO is directing and supervising the Iranian steel industry from exploration stage of its relevant raw materials up to marketing its products in domestic and international markets.

NISCO established an integrated steel mill, the Ahvaz Steel Complex, and a hot rolled plate producer, the Kavian Heavy Plate Mill, in Ahvaz , Khouzestan province in the south west of Iran. By year 1994, the 2 companies had merged to form “Khouzestan Steel Company”.
In order to satisfy the demand in hot and cold rolled coils, NISCO established an integrated steel complex, the Mobarakeh Steel Company, in Isfahan which started production in year 1992 with an annual capacity of raw steel of 2.5 million tons. Mobarakeh’s capacity stands today at close to 3.5 million tons per year and is expected to reach 4.5 million tons once all the expansion projects are in place.
Today, Iran’s steel output stands at close to 8 million tons per year, 1.2 million tons of which is produced by the private sector. This is still well below the annual consumption level of 13 to 14 million tons. That’s why the industry has seen a surge in the level of imports which stood at over 3 million tons for the first 6 months of the current year. This figure shows a 119 percent increase over the figure for the same period last year.

As a result of the shortage, many new and expansion projects are in place in order to fill the gap. Here are some of the more notable ones:

1- The Hormozgan Steel Complex near Bandar Abbas: A consortium led by SMS Demag, has signed an agreement with NISCO to build a mill to produce over 1.5 million tons of slab in addition to a lime calcining plant. Another contract for a Direct Reduction plant has been signed with the German-registered Mines & Metals Engineering.

2- The expansion phase of Esfahan Steel Co., the Saba Steel Complex, to produce over 700,000 (seven hundred thousand) tons/year of hot rolled coils: It has successfully been commissioned and is currently in its testing phase.

3- The Tin Plate Unit at Mobarakeh: This unit was inaugurated in September 2003 by president Khatami and is expected to reach its full capacity of 200,000 (two hundred thousand) tons/year in year 2004.

4- The pelletizing plant in Sirjan:
Nisco has signed an agreement with Germany’s Lurgi regarding building a 4 million tons-a-year pelletizing plant in Sirjan to be run by Gol-e Gohar Iron Ore Company.

5- The Chador Malu Pelletising Plant:
A Japanese consortium led by Kobe Steel, has signed a contract to supply Chador Malu Mining and Industrial Company equipment for a new 3.4 million tons/year iron ore pelletising plant in Ardakan, Yazd Province.

6- Tinplate Complex in Tabriz:
Danieli, the Italian steel mill manufacturer, is planning to participate in the construction of a 200,000 (two hundred thousand) tons/year tinplate mill in Tabriz.

Steel Pipe and Profile Industry
One of the biggest consumers of steel coils and plates is the pipe and profile industry. This industry currently consists of over 90 companies with a total production capacity of 1,920,000 (One million, nine hundred and twenty, thousand) tons per year.
Saveh Rolling & Profile Mills with an annual capacity of 1,200,000 (one million two hundred thousand) tons, has not only the largest market share but the most variety of pipes and profiles manufactured in Iran. It is also the largest Iranian exporter of pipes and profiles to every corner of the world.

As the largest state-owned steel company in the Middle East, NISCO ranked 26 in the table of the world’s major steel producing companies in 1999 and 2000. NISCO is also a regular member of the International Iron & Steel Institute.

During the Iraq imposed war, the steel industry development lost its impetus to some extent. However, immediately after the cease-fire and implementation of the First & Second Five-Year Economic, Social & Cultural Development Plans of the country, the steel industry achieved a considerable growth. It is worth mentioning that the steel production volume, which didn’t exceed an annual one million tons in 1988, reached 6.3 million tons in 1999 and 6.6 million tons in 2000.

Considering the country’s rich energy resources, raw materials, human resources and available technological capabilities, there is an appropriate background in investing in steel industry of the country. NISCO’s current installed capacity is 8 million tons per annum and necessary measures have been taken to increase the capacity to 10 million tons a year.

Further study is underway to expand the capacity up to 14.7 and later to 18.4 million tones per year. This company has also taken significant steps toward upgrading the quality of its products and improving the management system with due consideration to environmental protection and better working conditions.

Source: NISCO-Iran

7 thoughts on “Iran: Steel Industry Overview

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