POSCO will export its Finex steel making technology to PKP of Iran, which is on the way to buildinf a $1.6 billion steel plant in the country. The Korean steel giant will take over an 8 percent stake in the proposed Iranian steel plant, according to the Ministry of Trade, Industry and Energy and Industry on Jan. 26.
MOTIE officials said an agreement to that effect was reached by Korean, Iranian government officials and POSCO with an MOA on the deal to be signed in March after details have been worked out, including the exact amount of POSCO’s stake in the projected Iranian steel complex, and the use of POSCO’s Finex steel production technology at the projected Iranian steel plant.
The steel maker will be the first Korean business firm to enter Iran on a business deal after international sanctions were lifted.
PKP of Iran plans to build a steel plant capable of turning out 1.6 million tons of crude steel annually when it goes online in 2018 from its integrated steel production facilities (CEM) connected with the Finex steel production technology.
In September 2015, the firms signed a memorandum of understanding to build a plant with an annual production capacity of 1.6 million tons in Iran's Chabahar free economic zone
China was the first to import the steel production technology developed by POSCO, and Iran will be the second.
Managing director of Iranian Mines & Mining Industries Development & Renovation Organization (IMIDRO) Mehdi Krbasian and Choi Jin-sik, deputy head of POSCO, held a meeting, as imidro.gov.ir by reported.
Choi said the South Korean company launched a 2 million-ton plant as well as a 1.5 million-ton plant using Finex last year.
During the meeting, Karbasian pointed to the targeted capacity of Iran to produce 55 million tons of steel by 2025 and said in view of lower investment, Finex can play a remarkable role.
“IMIDRO intends to launch new steel projects in the southern ports of Chabahar, Bandar Abbas and Asalouyeh in cooperation with the private sector,” he said.
Finex is an iron-making technology developed by Siemens VAI and POSCO. Molten iron is produced directly using iron ore fines and non-coking coal rather than traditional blast furnace methods.
Elimination of preliminary processing is claimed to make the plant using Finex less expensive to build than a blast furnace of the same scale.
A 10-15 percent reduction in production costs is expected through cheaper raw materials, reduction of facility cost, maintenance staff and production time.
Iranian steel producing companies are using traditional blast furnace and direct-reduced iron production methods.
China and Japan, with annual production of around 800 and 100 million tons per annum respectively, are not in a favorable position with regard to raw materials. China does possess many iron ore mines, but they are at no means cheap compared to the iron ore they buy from Australia. Japan, on the other hand, is a pure importer of raw materials and has no advantage whatsoever. Australia is another country with vast reserves of iron ore and coal, but it does not have a developed steel industry.
So what constitutes an advantage in today’s steel production It is three words: economies of scale. China is able to produce over 800 million tons of steel annually cheaper than any other country. That’s why steel sector in many countries is threatened today by cheap steel of China.
A map showing the location of an Iranian steel plant to be built jointly with POSCO holding an 8 pct stake and that will import POSCO’s Finex steel production technology.(Photos:POSCO)
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