Italy’s Danieli Group has signed agreements with a value of about €5.7bn ($6.2bn) for the supply of plants and machinery for steel production in Iran.

The deals were signed during President Hassan Rouhani’s visit to Italy, the leader’s first visit to Europe since nuclear-related sanctions on Tehran were lifted earlier in January.

A €2bn joint venture named Persian Metallics has been formed by Danieli and a group of international, as well as Iranian, investors.

It will use iron ore and energy to produce about 6 million tonnes a year of pellets for feeding direct reduction plants. The pellets are an ideal raw material for melting with an electric arc furnace.

The other agreements relating to the supply of machines and plants to produce steel and aluminium will be signed with several Iranian companies for a value of about €3.7bn.

Global steel prices have fallen substantially over the past 18 months and firms involved in the construction of new steel plants say Iran is one of the few countries offering growth.

Speaking to MEED in October 2015, Danieli’s chief operating officer, Franco Alzetta, said Danieli has worked extensively in Iran over the past 30 years before nuclear-related sanctions on Tehran were imposed, and spoke of the potential Iran offers.

“Iran needs additional production capacity to meet domestic demand. We do not expect a huge boom like China or India, but it will be a significant market,” he said.

Italian firms have secured several new orders in Iran since sanctions were lifted. Ealrier in January, MEED reported that Italy’s Pessina Costruzioni has signed an initial agreement to build five hospitals in Iran.

The Milan-based company signed a memorandum of understanding (MoU) with Iran’s Ministry of Health for the development for five hospitals with a total of 1,000 beds.

Two 500-bed units will be constructed in Iran’s northern cities of Rasht and Nayshabur, according to Italian news agency AGI. The other three hospitals will be built in Tehran.

In December last year, Italian export credit agency (ECA) Sace signed agreements with three Iranian private banks.

The deals were inked with Bank Pasargad, Bank Parsian and Saman Bank, and are aimed at facilitating a more rapid and effective resumption of trade and investments in Iran once Implementation Day has been reached.

Sace says it intends to collaborate with the banks on the restoration of the payments system, and identify short- and medium/long-term projects of mutual interest, and to develop the insurance-financial structures best suited to support them.

At the time of signing the deal, Sace estimated that the end of sanctions on Iran might bring an increase in Italian exports by almost €3bn by 2018, with the best opportunities in machinery, oil and gas, and transport.