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Iran seeks partners for $10bn expansions in aluminum sector

Iran seeks partners for $10 billion expansion in aluminum copy

 

Bloomberg

Iranian miners are seeking $10 billion to develop a domestic aluminum industry that could serve to export 60 percent of production to meet growing demand for the metal used in cars to jets and beverage cans. The raw material bauxite needed to achieve that goal is proving hard to find.
Iran’s aluminum production of 350,000 metric tons a year is below capacity of 470,000 tons because of a shortage of bauxite and insufficient electricity generation, Mehdi Karbasian, managing director of state-owned Iranian Mines and Mining Industries Development and Renovation Organization, said at a conference in Tehran. With additional investment, Iran could boost output to 1.5 million tons by 2025, he said.
Unlike Iran’s oil industry which was crippled because of international sanctions, the domestic aluminum business was held back because a 25-year effort to develop a bauxite mine in the West African nation of Guinea still hasn’t produced. The 50-50 partnership with the Guinean government was renewed for another 25 years, and Iran is now awaiting a consultant’s recommendation by September on how to make the mine operational.
CROWDED MARKET
Iran will be entering a crowded market in the Middle East where production has grown to represent almost 10 percent of global output, in part because of low
energy costs.
Emirates Global Aluminium based in the United Arab Emirates boosted output 4 percent last year to 2.4 million tons while Aluminium Bahrain BSC wants to increase its production by 540,000 tons to 1.5 million tons.
Aluminum prices have dropped about 40 percent in the past five years as economic growth cooled in China, the world’s biggest producer and consumer.
The metal traded on the London Metal Exchange has advanced about 4 percent this year. Iran has invested $2.7 billion in its aluminum industry, and that figure needs to be raised “substantially” to meet domestic and Middle East demand, Karbasian told the conference in Tehran.

DEMAND RISING
Global aluminum demand will climb 5 percent in 2016 while production expands 2 percent, leaving a deficit of 1.1 million tons, Alcoa Inc., the biggest US aluminum producer, said in an April investor presentation.
Middle East and North Africa consumption expanded 5 percent in the first quarter, driven by
12 percent growth in Saudi
Arabia, Aluminium Bahrain said in its investor presentation
this month.

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