March 20, 2016
In a major investment win for Iran, South Korean steelmaker POSCO said Monday it has signed an initial agreement to help build a $1.6 billion steel mill in Iran.
Most foreign firms have been talking to Iran about selling it goods, while what Iran wants is investment. POSCO is talking about investing in Iran, but it did not say how much money it would put into the new steel plant and how much Iran was expected to pony up.
Before sanctions, Iran was the biggest steel market in the Middle East. Now, steelmakers around the globe are hoping that market will revive at a time major consumer China is slowing. But Iran wants to make its own steel.
POSCO and its affiliates plan to take 8 percent of the project to build a 1.6 million-ton steel plant with Iran’s Pars Kohan Diarparsian Steel (PKP) in the port city of Chabahar, POSCO said in a statement.
The world’s sixth-biggest steel producer aims to break ground for the plant next year, a POSCO spokesman said.
Iran aims to more than triple its steel output to 55 million tons by 2025, hoping to reduce its imports of steel products.
South Korean steelmakers controlled over half the Iranian market before harsh sanctions were imposed in 2012, according to POSCO’s research center.
As part of the deal, POSCO plans to transfer to Iran its so-called FINEX technology, which it touts as being more environmentally-friendly and cost-efficient than standard steelmaking methods. Obtaining modern technology is another goal of the Islamic Republic in the wake of sanctions.
POSCO’s construction unit, POSCO Engineering & Construction, also plans to build a plant to generate power as part of the project, using gas created by the steel factory.
The construction unit also expects to build a desalination plant to produce 60,000 tons of water a day.
