As Iranian president Hassan Rouhani signals he is willing to talk with the USA about his country’s nuclear ambitions, Iran puts itself forward as a viable place to produce the miracle metal.
Matthew Moggridge* reports from Metal Bulletin’s 28th International Aluminium Conference in Geneva.
They’ve exchanged letters and spoken on the telephone. Surely it’s only a matter of time before there is an historic meeting between Iran’s new president, Hassan Rouhani, and Barack Obama. Could Obama strike yet another blow for world peace after his 11 th hour deal that spared the Syrians an aerial bombardment?
Rouhani says Iran is only interested in developing nuclear power for domestic energy purposes, but the world is not convinced. Israeli Prime Minister Benjamin Netanyahu, understandably wary, describes Rouhani as a ‘wolf in sheep’s clothing’ and has vowed that Israel will not allow Iran to develop nuclear weapons.
While a thawing of relations between the USA and Iran is likely, it doesn’t necessarily mean that the country, once branded by George ‘Dubya’ Bush as part of the ‘axis of evil,’ is suddenly ripe for investment by the global aluminium industry, although technically, it is just that.
Panthea Geramishoar, a senior expert in the non-ferrous metals department of Imidro (Iranian Mines & Mining Industries Development & Renovation Organisation) was speaking at Metal Bulletin’s 28th International Aluminium Conference in Geneva.
According to CIA data, Iran’s GDP of US$l 016 billion makes it the world’s 18th largest economy and, despite recent problems on the international stage, there is plenty of optimism surrounding the future of the Iranian economy.
Iran offers a broad industrial base, an educated and motivated workforce, cheap labour and a young population. Panthea said that 30% of the workforce is occupied in industry.
Iran has an abundance of cheap energy and access to 300 million people in the Caspian, Persian Gulf and Far East markets, making it an interesting prospect for smelters looking for a foreign production base outside of the Gulf region – if they can ignore the potential for unrest, US sanction and possible military intervention should the world’s suspicions over Iran’s nuclear ambitions be proved right.
Iran is producing 14.5Mt of steel and 340kt of aluminium – making it the 20th biggest miracle metal producer in the world. It produces 230kt of copper, 70Mt
of cement and 189,000 passenger cars.
The Iranian Government’s Vision 2025, is a strategy for sustainable development that envisages steel production rising to 55Mt and aluminium to 1.5Mt. It is anticipated that passenger car production will soar to three million units.
With an abundance of crude oil and natural gas Iran, it seems, has it all to play for on a global scale. In fact, where aluminium is concerned, Iran claims it was the first producer in the Middle East, having started production back in 1972, and currently boasts around 487kt of capacity. There are three major aluminium producers Iranian smelters: Iraleo; Hormozgan; and Almahdi.
Iralco has two potlines, one reliant upon outdated Reynolds technology and the other on an updated SAMI system from China. Iraleo is producing approximately 176kt of aluminium and has around 230kt of capacity. The discrepancy between production and capacity, according to Panthea, is due to the smelter’s outdated technology and part closure by Iran’s environmental authorities.
Almahdi and Hormozgan rely upon Dubal’s D18 and D20 reduction technology respectively, and have similar production capacities – 11 Okt and 127kt. Hormozgan, however, is producing only 56kt due to power supply difficulties.
Where downstream industry is concerned, Iran accommodates rolling, extruding and casting plants and has issued permits for 3Mt of downstream production of which 1 Mt is currently active or in development. Extrusion plants account for over 50% of Iran’s downstream industrial base, said Panthea.
Iranian demand for aluminium has been rising over the past seven years at an annual rate of 10% because of growing markets where aluminium has an undeniable role to play – such as automotive, construction, electronics and packaging.
Panthea told delegates that the building and construction industry was, by far, the biggest downstream consumer of aluminium in Iran. She said that annual Iranian housing demand would reach 1.2 million in 2015. Between 2008 and 2013 there was a 12% growth rate in the Iranian housing market and demand could reach 12m to 14m by 2025. Between 20% and 50% of private investment is destined for Iran’s housing market.
By 2025, demand for passenger cars is estimated to be 2.3 million units, said Panthea, quoting Frost & Sullivan. Between 2003 and 2011 Iranian car production experienced a 20% growth rate and today has a production capacity of 1.65 million units.
The electronics market in Iran is estimated to be worth $10 billion.
The changing face of Iranian cities means that more aluminium is being consumed and by 2025 Panthea estimates that demand could reach 1 Mt or possibly even 1.9Mt.
While power production in Iran has always been rising, the problem is an outdated and inefficient distribution system, which doesn’t send power to where it’s needed, said Panthea.
Power is a competitive factor in aluminium production and the global share of different fuels has changed over the past three years. Hydropower has decreased, said Panthea, while gas has risen as a chief source of power in the industry, which is good news for Iran as it is the world’s second largest producer.
Iranian gas prices are below average for the MENA region, according to Panthea, and comparable with the price of Canadian hydropower.
The average current cost of aluminium production in Iran is around $2,000/tonne in current market conditions. It consumes about 15-16kwH per kg of aluminium.
With cheap energy in the form of gas and low labour costs, Iran could be viewed as ‘an aluminium oasis’ if it wasn’t for bauxite – or rather a lack of it – which is Iran’s big challenge in terms of securing a place for itself in the global aluminium market. However, there is enough bauxite in the world to last for the next 300 years, said Panthea, and Iran is happy to import it for r fining into alumina.
Plans are in the pipeline for an 800kt
alumina refinery and Iran intends to invest US$1.3 billion in raw materials projects. There are also three smelting projects on the drawing board worth around US$7 billion.
* Editor, Aluminium International Today