Iran To Add A Further 1.2 Million Mt/Year Of Steel Capacity

18 October 2016

The first phase of Iran’s South Kaveh Steel (SKS) plant is now complete and ready to be formally inaugurated, according to the facility’s owner, the state-run Mostazafan Foundation.

The first part of the project includes two DRI modules with a total capacity of 1.86 million mt/year, a de-salting plant and a 1.2 million mt/year EAF and billet caster.

SKS is located 22 km from Bandar Abbas, close to the Persian Gulf, and so is well positioned for the export market.

In the project’s second phase, another 1.2 million mt/year EAF and a 5 million mt/year pellet-making plant will be added, according to the company.

The second phase of the project is due to begin construction in late 2016 and is intended to double capacity, a source familiar with the matter said.

SKS’s DRI modules were initially launched in 2012 and it regularly exports sponge iron to the Far East and Persian Gulf countries. But with the new steel plant, SKS will be able to export steel billet instead of DRI, the source said.

A portion of SKS’s required pellet is imported from India, but could eventually be supplied domestically, owing to the continuing rise in the Iran’s pellet capacity, he added.

Considering the rising global met coal price, Iran’s natural gas is an advantage to SKS and other Iranian steel producers that are implementing DRI modules; their production costs will be highly competitive compared with coal-based steel producers, the source familiar with the matter said.

The Iranian government is planning to raise the country’s steel production capacity to 55 million mt/year by 2025, from the current level of 22 million mt/year. Since Iran is facing a national water shortage, almost all new steel projects are based on seawater desalination, which raises the initial investment required.


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