Iran aluminum output threatened
By Mehrdad Balali
TEHRAN, June 7 (Reuters) - Government price regulations seriously threaten
Iran's fledgling aluminum output, raising concerns among producers of possible
heavy losses, Iran's Mine and Metals Minister Eshaq Jahangiri said on Wednesday.
``The main problem facing producers is that they have to sell their
products at 30-40 percent below market prices. This has led to two different
prices for aluminum in Iran,'' Jahangiri told Reuters in an interview.
``(Regulated) prices are even below production costs. If there is no
adjustment to prices, or production is not subsidised, they will suffer
losses. We have serious concerns.
``We hope to be able to solve the problem. If aluminum production is
hurt, market prices will rise further,'' he said.
The minister said the government was planning to create a local metals
exchange market to allow metals to be traded.
``We hope to be able to eliminate the double rate for aluminum through
the local metals market,'' he said.
Iran has two aluminum smelters. The state-owned IRALCO in central Iran
produces 120,000 tonnes of aluminum a year, one- third of it for export.
The semi-private Al-Mahdi in southern Hormozgan province operates 15
percent below annual capacity of 110,000 tonnes.
Jahangiri said aluminum smelters had difficulty obtaining raw material
He said the sector largely swapped locally-produced aluminum ingots
for alumina from foreign companies, or made periodic purchases from the
But producer were moving towards more long-term and systematic purchases
for better production planning, he said.
Industry officials say some 200 manufacturers of aluminum products were
producing below 20 percent of their capacity because of a shortage of raw
Iran consumes an average 160,000 tonnes of aluminum a year.
Many factories are using scrap recycling to fabricate aluminium products,
a trend which lowers quality.
LACK OF BAUXITE RESERVES
As opposed to other minerals, Iran lacks vast bauxite reserves.
Jahangiri said Iran was studying a proposal by a Russian firm to extract
aluminum from alunite and other alternative minerals.
He said Iran was also finalising talks with Gulf-based ACD on a $150
million project to expand the Al-Mahdi facilities, which include a refinery,
a smelter and a power plant.
An Italian firm is next in line for that project, which seeks to raise
annual output to 220,000 tonnes in five years.
Iran also eyes a long-term project for a huge smelter in the energy-rich
Bushehr Gulf port, in view of an ambitious plan to raise annual aluminum
output to one million tonnes in less than a decade.
So far, few have come forward for these projects, which are part of
100 projects worth $10 billion offered a year ago for international tender.