LONDON (Reuters) - Iran is on track to launch a new aluminum smelter early next year that would boost the country’s output by 70 percent, making it self-sufficient in the metal by taking advantage of rich natural gas reserves.
Construction is underway of the South Aluminium Corp (Salco) smelter, due to produce 300,000 tonnes per year in its first phase, Mehdi Karbasian, deputy minister of industry, mining and trade, told the CRU Aluminium conference in London on Tuesday.
Karbasian is also chairman of IMIDRO, the state-owned Iranian Mines and Mining, Industries, Development and Renovation Organisation, which owns 49 percent of Salco. The other 51 percent is owned by Iran’s Ghadir Investment Company.
While Iran currently produces slightly over 400,000 tonnes per year of aluminum at two plants, consumption is around 600,000 to 700,000 tonnes, said Amir Mirchi, managing director of Canadian consultancy Auryce, which is advising Salco.
Salco is being built in the Lamerd special economic zone in the south of the country near the Persian Gulf, where a deep water port is also being constructed, he added.
The $1.2 billion Salco facility is being built by China’s China Nonferrous Metal Industry’s Foreign Engineering & Construction Co, or NFC.
Iran’s existing Almahdi smelter was originally due to be a joint venture before the 1979 revolution with Canada’s Alcan, now owned by Rio Tinto, said Mirchi, a former Rio executive.
Karbasian said the Salco smelter would use energy from a gas-fired power plant and that Iran hoped to further expand its metals industry by making use of the country’s huge gas reserves, which along with Russia’s are the biggest in the world.
The Salco plant is due to increase output to 1 million tonnes by 2025 while the Iranian steel sector plans to boost production to 55 million tonnes by the same year from 31 million currently, he said.
Steel output grew from 20 million tonnes in 2013, when exports were only 1 million tonnes. Last year steel exports soared to about 9 million, Karbasian said.
Having gas power will also help with costs at Salco, Mirchi said. “I see Salco production costs way below $1,200 (per tonne).”
The benchmark aluminium price on the London Metal Exchange on Tuesday was about $2,230 per tonne.
(This version of the April 24 story, corrects name of smelter in seventh paragraph that was due to be a joint venture)
Reporting by Eric Onstad, editing by David Evans