Three bid for Arfa steel plant

26 May 2006

Three consortiums have bid for the estimated $300 million contract to build the new Arfa Iron & Steel Company plant at Ardakan near Yazd. Arfa officials say commercial packages will be opened by the end of June, leading to an award of the 36-month contract and the start of works by the end of the year (MEED 21:4:06).

The bidders are: the local Iran International Engineering Company (Iritec), in consortium with Germany's Mannesmann Demag and Irasco, an Italian-based company owned by Iritec; China's Metallurgical Construction Company (MCC) with the local Greco; and a partnership of South Korea's Pohang Iron & Steel Company (Posco) and Italy's Danieli & Company.

The engineering, procurement, construction and commissioning contract will involve installing a direct reduction iron unit and a steel casting and melting unit. Iron pellets will be brought from the Ardakan pelletising plant in the same city to be used as feedstock for the new facility. The consultant is the local Foolad Technic.

Iron ore will be sourced from Chadormaloo mine, also located in Yazd province, and with good rail access. The client's stipulation that contractors must bring finance to the project could complicate a contract award because Western banks have recently proved wary of extending loans to local projects because of international pressure on Tehran to abandon its nuclear programme. Iran plans to increase steel production to 29 million t/y from 7.5 million t/y. Projects on the table include an Iranian-Indian joint venture, a Khouzestan Steel Company plant and an Iran National Steel Industries Group (INSIG) project.

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