Aluminum

High Demands
High Hopes

Almahdi-IRALCO merger marks the birth of a leading aluminum producer of the Middle East

Each year, the world produces 18-20 million tons of aluminum ingots. Despite all ups and downs associated with globalization of economy, the international aluminum industry has constantly achieved an annual 2-3% growth through the recent years. Aluminum is no longer used just in buildings and structures. Scientific achievements have paved the way to diversify and increase the application of aluminum in such industries as aviation, electronics, auto production and packing. In years 1992-93, use of aluminum in auto industry increased by 23%, given the fact that lighter vehicles will burn less fuel.

In 1997, the Persian Gulf states produced some 700,000 tons of aluminum which forms 3.5% of the world product. They are now expected to produce over 1.5 million tons or more of the world product.

As for Iran, awareness to promote the quality and quantity of aluminum products is ever-increasing. As compared with its advanced rivals, Iran consumes higher amounts of energy to produce aluminum. Moreover, it faces the vital issue of raw materials for aluminum plants. Both these facts indicate the greater need for research and development. To increase the added value and profitability of its aluminum industry, Iran is left with no option but to spend less foreign currency on the import of raw materials, mainly alumina. Iran’s alumina demand is expected to soon reach 500,000 tons.

On different occasions, the Ministry of Mines & Metals has reiterated its commitment to supply the country’s aluminum plants with sufficient amounts of alumina powder either locally or from overseas sources. In this regard, mention can be made of Iran’s involvement in a bauxite project in Guinea. The bauxite exploited from the mine in Guinea cannot be easily exported to Iran given the fact that railways and other transport facilities are yet to be constructed in that country. However, the vast amount of deposits and reasonable price of bauxite provided in this project can, in a while, become another assurance to the raw-material supply of Iran’s aluminum plants.

Aluminum

Main Players

Iran’s Third Socioeconomic Development Plan and policies of the Ministry of Mines & Metals both call for greater participation of the private sector in the industrial sector. Yet, it cannot be denied that building a plant to produce aluminum ingots requires some heavy investment which can be hard for a private company. The Ministry trusts that the private sector is efficient and welcomes the private sector partnership in production of aluminum ingots. To enter such a partnership, the private sector of Iran may need a foreign partner. Until then, the main players of Iranian aluminum industry will be two companies: the long-established IRALCO and the newly-commissioned Almahdi.

Based on the standards of London Metal Exchange (LME), IRALCO each year produces over 120,000 tons of 99.70%-pure aluminum products namely ingots, T bars, billets and slabs. The company shows a record of 20% increase in production of ingots and has had exports to countries including India, the Netherlands and Singapore.

In line with state policies of promoting non-oil exports, Almahdi Aluminum Corporation was mainly established for export purposes. It is located in the Mines & Metals Special Economic Zone by the Persian Gulf. The geopolitical and industrial significance of the Persian Gulf is increasing and this gives Almahdi greater facilities not only for the export of products, but also import of some its requirements. In its first phase, Almahdi operates a high-tech production line with 110,000 tons of production capacity. This figure is scheduled to reach 220,000 and later, 330,000 tons.

In a measure to coordinate all efforts for balancing demand, supply and distribution of aluminum, Almahdi and IRALCO recently merged. The product of this merger is one giant handling company to take charge of all exploitation and production operations of aluminum. The new huge company has some fixed ambitions: To supply domestic demands which top an annual 150,000 tons, to provide all required raw materials domestically, to export high-quality aluminum products and to remain an environment-friendly industry.

To spend less foreign currency on its development projects, apply the latest production methods and to rapidly implement its development projects – especially those of Almahdi – the Iranian aluminum industry welcomes joint ventures and investment of international companies. The Ministry of Mines & Metals has obtained the permit to get finance for development projects of Almahdi.

Iranian aluminum industry in the past two decades suffered hurdles such as short-term policies for the provision of raw materials, an imposed war and its destructive effects on the country’s economy, economic sanctions posed by some industrial countries and lack of confidence in its export capabilities. Today, they are all behind. With a firm determination to grow, the main players of Iran’s aluminum industry are getting further facilities to follow their development projects through international partnership.