6 Iranian mills planning steel consolidation
Financial Tribune reported that Iranian steel manufacturers believe consolidation is the only way out of the ongoing recession, as they aim to boost steel exports amid outdated technologies, high operational cost and lack of transportation and infrastructure networks are some of the major problems. Iran has a large number of steel factories with production capacities ranging from 30,000 to 6 million tonnes. Large mills are the drivers of the local steel industry, as they produced 88% of the total output in the last Iranian year (March 2015-16).
To optimize production, local mills have proposed creating a steel consortium. Six steel companies, namely Hormozgan Steel Company, Maad Koush Iron Ore Pelletizing Company, Maad Chemie Iron Ore Concentration Plant, Saba Steel Company, South Kaveh Steel Company and Pars Mining Industries Development Company, plan to form a consortium to produce 10 million tons of steel per year. Their merger would mark the industry’s first step toward the integration of steel operations for boosting productivity and exports.
Mr Bahram Sobhani, CEO of Mobarakeh Steel Company, said “The industry’s largest obstacle to growth is the myriad of steel plants operating at low, uneconomical production capacities, which is a waste of time, energy and resources. The merger implies all the companies sharing the infrastructure: one railroad, one electricity source and one water treatment plant, which lead to a much lower cost. The implementation of the proposed plan will indicate the Iranian steel industry’s maturity.”
Source : Financial Tribune