Six companies submitted bids in early 2001 for the 4 million-tonne-a-year pelletising plant, which will be operated by Nisco subsidiary Gol-e Gohar Iron Ore Company, the operator of the country's biggest iron ore mine. Japan's Kobe Steel was ranked first after the evaluation of both technical and financial bids, followed by Austria's Voest Alpine Industrieanlagenbau, three local companies and Italy's Danieli & Company.

The new guidelines, announced by Industries & Mines Minister Eshaq Jahangiri in January, call for local contractors to take the leading role in local/international partnerships, and for local content to be at least 51 per cent. The ministry says the new regulations aim to improve utilisation of local resources and to generate new jobs.

'The rules largely existed before but will be applied more strictly now,' says a source close to the project. 'However, if a tender shows that 51 per cent local content is not possible, the client can try to get a special permission for the contractor from the authorities.'

Industry sources say none of the companies bidding for the Gol-e Gohar plant fulfilled the new local content requirement.

'We are planning to bid another round,' says an official at one international contracting firm. 'But we need to negotiate new contractual conditions with potential local partners. If local companies are to take the leading role, then they will also need to carry the main responsibility for the project.'

Companies bidding for the project are required to provide their own finance schemes.