Sanctions and Population Growth Drive Iran's Cement and Steel Production

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Written by Richard Finlayson, Senior International Editor for Industrial Info Resources (Sugar Land, Texas)--Iran's Ministry of Industries and Mines estimates that the country's fast-growing population (which is currently about 80 million) and the continuous demand for construction and development projects will produce a need for 70 million tons of cement per year by 2021. Another driver behind Iran's primary industrial development is the need to diversify the economy away from hydrocarbon-based activities in the face of international trade sanctions, which are biting the oil industry.

In the first four months of the Iranian year, 24.4 million tons of cement were produced. According to the government, 6.4 million tons of cement were produced between June 20 and July 21 this year, and clinker production reached 5.6 million tons during the same period.

In July 2012, the cement industry contractors union said that production topped 17.9 million tons in the period March 20 to June 20, which represented a 6% growth year-on-year (YoY) for the same period in 2011.

The country's steel industry production is projected to reach 55 million tons annually by 2025. In 2011, steel output was 12.7 million tons, and 16 million tons of steel products were produced. In the first four months of 2012, more than 5 million tons of crude steel were produced, which represented a YoY growth of 7.1%. Over the 4.7 million tons were produced in the same period in 2011.

The government recently approved $3.2 billion to expedite the implementation of the development of seven large steel projects, and the private sector will be encouraged to participate in the projects.

The development of four industrial parks on Iran's borders with Turkey, Iraq, Turkmenistan and Afghanistan are being planned to promote non-oil exports in the face of sanctions. The Islamic Republic News Agency reports that the Iran-Turkey industrial estate is already being established, and negotiations are under way to build the other three.

The trade promotion organization of Iran forecasted that annual trade turnover will reach $160 billion by the end of the fifth five-year development plan in March 2016. Annual imports and exports are planned to reach $77 billion and $83 billion, respectively, by 2016. For related information, see June 21, 2011, article - Iran to Exploit Metals and Minerals Wealth and September 28, 2011, article - Hydrocarbons, Industrial Diversification and Youth Create Strong Growth Mix in Changing Middle East.

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