Iran didn’t need to take a cue from its arch enemy Saudi Arabia’s success with its Alcoa joint venture Ma’aden Aluminium smelter and downstream operations — just about every Middle Eastern natural-gas producer with production to spare has invested in aluminum smelting as an easy win outlet for vast natural gas reserves.
Exporting natural gas as liquefied natural gas (LNG) is a profitable business, but building the infrastructure is costly. An alternative is building an aluminum smelter, which is also costly but arguably yields a higher value add.
According to AluminiumInsider, the Iranian Mines and Mining Industries Development and Renovation Organization’s (IMIDRO) Amir Sabagh told Platts the firm was in the midst of building a 300,000-metric-ton-per-annum aluminum smelter in the southern coastal province of Bushehr.
Funding is still problematic for Iranian firms, so it is no surprise the Chinese are involved, with China Nonferrous Metal Industry’s Foreign Engineering and Construction Co. largely footing the bill.
The country does not have sufficient alumina production to meet the new plant’s demands, so again the Chinese are further involved in talks to build a new 2-million-tons-per-annum alumina refinery in Asaluyeh, Bushehr province. It is reported the refinery is to be fed by bauxite imported from Iran’s long-term supplier, Alumina Company of Guinea (ACG) in Conakry, Guinea.
ACG is owned by Rusal – small world, the aluminium industry, isn’t it?
Iran probably hopes partnering with the Chinese will mean their smelter project will remain on track, even if the U.S. Congress decertifies the nuclear deal at the end of this 90-day period (a decision still very much in doubt).
The Platts article notes Iran’s present aluminum capacity is estimated to be 457,000 metric tons per annum (although it’s running at less than that). Plans are also in place to increase Iralco’s Jajarm plant’s capacity by 36,000 metric tons, up from 220,000 metric tons.
Iran struggled to expand its natural-gas reserves during the years of sanctions, but now has access to more foreign technology and funds. Iran is estimated to hold the world’s second-largest reserves of natural gas after Russia, at nearly 18% of global reserves. Much of it is onshore and relatively accessible — despite the unreliable, fractured nature of the regime, China probably figures Iran is too good an opportunity to miss.