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Iran Transforming Into Continental Railroad Hub

Jul 24, 2016, 11:37 AM
News ID: 719
Iran Transforming Into Continental Railroad Hub

EghtesadOnline: Standing on the crossroad of grand trade routes with the removal of economic sanctions and inflow of foreign investments, Iran will be able not only to develop internal railroads but turn into a hub, connecting the continents.

These projects will become the driver of steel consumption, rails in particular, that will be satisfied with the help of foreign and domestically produced material, Metal Expert, a Ukraine-based provider of news and analysis on steel products and steelmaking raw materials industries, wrote in a recent report dubbed “Iran in Focus”.
The country plans to expand the length of its railroad from the current 15,000 km to 25,000 km in less than a decade, with 7,500 km already under construction.
Among major projects are those of global importance, such as the International North-South Transport Corridor, connecting Russia with the Persian Gulf, China’s Silk Road, leading through Iran to Eastern Europe as well as the Eastern Corridor, joining the port city of Chabahar to Central Asia, the Caspian and the Caucasus region.
The expansion alone will require about 700,000 tons of rails, the Islamic Republic of Iran Railway assesses, while double tracking and reparation of existing lines may add to this figure, reports Financial Tribune.
Over the period of sanctions and up to now, Iran has been covering its rail needs with the help of import material, in particular from China, India and Turkey.
After the removal of sanctions, the country received a chance to renew trade with Europe. Thus, Iran concluded a deal with Italian Aferpi for the supply of 60,000 tons of rails to IRIR. Moreover, in early April India raised a credit line for $450 million to Iran, which will allow continuing supplies of rails (around 250,000 tons) from SAIL and Jindal Steel agreed last year.
Turkish Kardemir and Russian Evraz can also be among potential suppliers. In particular, Evraz made numerous statements about plans to allocate around 20‑30% of rails for export in medium-term, concentrating on Latin American, Middle East and European markets.
“The choice is not very large for Evraz. Just Iran and Saudi Arabia are the most promising outlets for rails sales in the Middle East,” a market insider said.
Nevertheless, in the coming future, Iran plans to become self-sufficient in this kind of material. This June, the country’s largest longs producer, Esfahan Steel Company, after a number of delays has finally started production of rails at its 750,000-ton modernized heavy section capable of rolling 450,000 tons of UIC60 and UIC85 rails per year.
ESCO, however, is not the only local company willing to enter the rail segment. Anamis Steel Complex has announced plans to construct 1 million tons per year of merchant bar mill in the south of Iran capable of producing rails. The start of project implementation is scheduled for this autumn.
“The complex will manufacture steel rails for the repairing of existing lines as well as exports,” the company representative, Seyyed Abdolkarim Hashemi, told Mehr News Agency.
Despite Iran being quite ambitious in development of railroads, the only barrier for its successful realization may be lack of finance. Although the country is getting more international support after sanctions removal, financial issues remain on the agenda, which may influence steel consumption growth rate and return of investment of local rail producers.