Provincial steel projects: from implementation to privatization

Provincial steel projects: from implementation to privatization

The eight steel projects, later known as provincial steel projects, are based in the eight province and are implemented with the aim of creating 6.4 to 8 million tons new capacity of crude steel production. Each one of the projects are planned for 800,000 to 1 million tons crude steel production, including a direct reduction unit (sponge iron production) and a crude steel production unit (ingot). The projects are placed mainly in less developed regions of Iran to make a new step for boosting their economy.

The projects include Ghaienat Steel in South Khorasan province, Sabzevar Steel in Khorasan-e- Razavi province, Bafgh Steel in Yaz, Baft Steel in Kerman, Neyriz Steel in Fars, Sepid Dasht Steel in Chaharmahal and Bakhtiari, Shadegan Steel in Khuzestan and Mianeh Steel in East Azerbaijan. The Bafgh Steel project is handed over to a private company in its first years of implementation so currently the projects are considered as seven projects.

Initially, it was planned to hand over the projects to the private sector after reaching to operation phase but the eleventh government, in line with policy of privatization and cutting costs, decided to involve the private sector in the projects or concede them completely.

While new government was forming, Iranian Mines and Mining Industries Development and Renovation Organization (IMIDRO), as executive and manager of the projects, make it a priority to accelerate removing financial hurdles particularly opening LC (letter of credit) of the projects. Pursuing this target since September 2013 (Shahrivar 1392) until Mai 2014 (Ordibesht 1392), LC of four projects including Ghaienat, Sepid Dasht, Neyriz and Shadegan were opened.

LCs for the three other projects of Baft, Mianeh and Sabzevar are on the verge of opening. Meanwhile the direct reduction units of the projects are activated since half of last year and it is expected that the sponge iron production unit of one or two projects to be operational by the end of 1393 (first months of 2015).

Moreover, IMIDRO took one step forward and during opening of LCs, started to hand over the projects to major steel companies or specialist companies in the steel sector in recent months. Currently 65 percent stake of Sepid Dasht Steel is conceded to Foolad Mobarakeh. Foolad Mobarakeh is the largest steel producing company in the Middle East. The same policy is applying for Neyriz Steel. Ghadir Investment Company, one of the big names in Tehran Stock Exchange is taking 65 percent stake in implementation of the project.

Also Khuzestan Steel Company, Iran’s largest steel ingot manufacturer, holds 65 percent stake in Shadegan Steel and Mellat Finance Group is taking 65 percent stake in Mianeh Steel. Mianeh Steel project is beside Azerbaijan Navard Steel and uses joint infrastructure with Navard plant.

IMIDRO is still pursuing the policy of partnering with the private sector for remaining projects. The advantage of participating with IMIDRO for investors is support of the organization until completing of projects that eventually would accelerate progress of them. It should be mentioned that according Article 44 of the Constitution, after completing of projects, IMIDRO would sell its stake to the private sector.