FL Smidth's contract covers the supply of a 5,000-tonne-a-day clinker line, the first of this size to be installed in the Islamic republic.

The client is the local Kangan Bartar Cement Company (KBCC), a private venture developing the greenfield plant. It is understood that financing arrangements for the project are under discussion.

FL Smidth is also understood to be in advanced talks for several other cement contracts in Iran, while Germany's KHD Humboldt Wedagis closing in on an equipment supply deal for another private cement plant aiming to produce for the export market. The facility is planned to be located in the south.

The award is a further sign of the growing interest in the local cement sector. Abbas Safakish, director-general of the Mineral Industries Department at the Industries & Mines Ministry, in January said that about 4 million tonnes of capacity will be brought on stream in 2003/04. By 2021, production is planned to double to 60 million tonnes a year.