• Sanctions relief will allow raw materials imports
  • Iran can utilise gas reserves to power smelters

Iran could attract significant investment in its aluminium sector after the suspension of sanctions due to the removal of barriers on importing raw materials, according to an industry expert.

The expansion of aluminium industry in other Gulf countries has been driven by abundant supplies of low cost gas, and Iran’s own vast gas reserves could give it significant potential to develop new smelting operations.

“Iran could surprise if the sanctions are removed, and I think you could see some projects ramping up there quite quickly based on Chinese technology,” says Marco Georgiou, head of aluminium primary and products at London-based consultancy CRU Analysis.

“Iran has Chinese investors in their projects and the constraint so far has always been raw material supply… because of the sanctions they couldn’t buy raw materials so easily,” Georgiou told MEED.

Iran has two major aluminium producers: Iranian Aluminium Company (Iralco) and Almahdi Aluminium Corporation (AAC).

Iralco’s smelter in Arak, western Iran, has the capacity to produce 120,000 tonnes a year (t/y) of primary aluminum, according to its website.

AAC, based in Bandar Abbas on the Gulf coast of southern Iran, has the capacity to produce 220,000 t/y and has been targeting a third expansion phase to reach 330,000 t/y.

The smelters operating in Iran are relatively small-scale compared with the new facilities operating across the Gulf in GCC countries such as the UAE and Bahrain.

GCC aluminium producers could also benefit from the lifting of sanctions on Iran.

“Increased demand in Iran could also create opportunities in GCC countries so Iran opening up could change things somewhat within the region,” Georgiou says.