“Through this rail line, we expect clinker exports from Arvand to reach a total of 3 million tons by the end of the current Iranian year [March 20, 2021],” Ali Mousavi, the deputy head of Arvand Free Trade Zone for investment and business expansion affairs, was quoted as saying by IRNA.
The official noted that Iran exports 12 million tons of clinker every year and Iraq is the biggest export destination.
“Prior to this, loading and unloading of clinker used to take place in Khorramshahr Port which had caused environmental hazards,” he said.
Gateway to Iraqi Market
Arvand Free Trade Zone located in southwest Iran, bordering Arvand River and beyond that southern Iraq, has a unique proposition on offer, which differs from the other free trade zones across the country, and that is its direct access to the Iraqi market.
Currently, among all of Iran’s neighboring countries, Iraq stands as the largest market for Iranian products.
FTZ is located on the northern tip of Persian Gulf and borders Khuzestan Province and the major cities of Khorramshahr and Abadan.
The zone covers 8,600 hectares and includes administrative, tourism and commercial areas. Nearly 3,800 hectares are utilized for warehousing and shipping. The port itself boasts the deep waters of Bahmanshir, Karoun and Arvand rivers. It also has excellent road, rail and air transit, which boosts its connectedness.
It was in 2004 when the area began its transformation from a rural to industrial and commercial region. Cabinet members officially demarcated the area by 2005.
As of March 2018, Iraq used to be regarded as the main export destination of Iran’s cement but it is more than a year now since the neighboring country has suspended the import of this essential building material from Iran.
“With the help of European countries, Iraqis established factories with a capacity of producing 40 million tons of cement and no longer need Iran’s cement,” said Hamid Hosseini, a senior member of Iran-Iraq Chamber of Commerce.
“At first, they increased cement import tariffs and then imposed an occasional ban. At present, Iraq is only purchasing clinker from Iran.”
According to Abdolreza Sheikhan, the secretary of Iran's Cement Association, exports of cement saw a 24% decrease over the five months to Aug. 21, due to the decline in demand in neighboring countries, particularly Iraq.
“Clinker exports increased by 25% over the period. A total of 3.6 million tons of clinker and 1.85 tons of cement and clinker were exported to Afghanistan, Azerbaijan, Uzbekistan, Armenia, Bangladesh, Pakistan, Somalia and the UAE over the five-month period,” he was quoted as saying by the Persian daily Etemad.
A total of 5.84 tons of cement worth $128 million were exported from Iran to 28 countries during the first four months of the current Iranian year (March 20-Aug. 21), according to the spokesperson of the Islamic Republic of Iran Customs Administration.
“Iraq with $424.74 million, Kuwait with $23.37 million and Afghanistan with $19.54 million were the top three export destinations of Iranian cement,” Rouhollah Latifi was quoted as saying by Mehr News Agency.
Other customers of the product during the five months under review were India, Russia, Qatar, Kenya, Sri Lanka, Pakistan, Armenia, Turkmenistan, Kazakhstan, Azerbaijan, Bangladesh, China and Oman.
According to Latifi, Iran's production capacity currently stands at 85 million tons while domestic demand amounts to around 65 million tons per year.
Sheikhan said regional countries prefer to import rather than produce clinker due to its high production costs.
“Iraq used to account for 30% of Iran’s cement exports. Today, Afghanistan is the main importer of cement from Iran; Afghanistan has to pay between $50-60 per ton for imports of cement from Pakistan compared with $25 per ton from Iran, plus transportation and customs. Five-month exports of cement to Afghanistan reached 584,000 tons,” he said.
Referring to the 60% increase in transportation costs since the beginning of the current fiscal (March 20), he said, “Despite everything the Consumer and Producer Protection Organization throws at us, we were the only industry that did not lay off any employees. I also need to note that each fire brick now costs 4 million rials; last year, it was sold at one-third of this price.”
Distribution of cement has increased by 18% compared with last year; each ton of cement is priced at 2.2 million rials and a 50-kilogram bag of cement is sold at 133,000 rials. The relatively low price of cement compared with other materials has led to a change in the construction of buildings.
“Steel frames are being replaced by cement frames; instead of using bricks, builders opt for cement blocks and lime is being replaced by cement,” he said.
According to the head of Cement Employers Association, more than 17.5 million tons of cement and clinker were exported from Iran last year (March 2019-20), registering a 32% growth compared with the previous year.
“Cement accounted for 6.7 million tons and clinker for 10.8 million tons of the total sum. Our main export destinations over the period were Iraq, Kuwait, the littoral states of Persian Gulf, China, Bangladesh, India and Central Asian countries,” Abdolreza Sheikhan was also quoted as saying by Mizan Online.
“A total of 60.3 million tons of cement and 66 million tons of clinker were produced in Iran last year, showing a 9% and 6.9% rise respectively compared with the year before.”
According to Sheikhan, Iran is the world’s sixth biggest exporter of cement chain products.
Iran aims to increase its cement production capacity to 100 million tons by 2021 and to 120 million tons 2025.
Iran was ranked the seventh biggest producer of cement in the world in 2019, with a production of 60 million tons. The country was previously the world’s eighth biggest cement producer with 58 million tons, as Turkey was the seventh biggest producer with 72.5 million tons.
However, as Turkey decreased its production in 2019, Iran took the seventh place, Iranian Mines & Mining Industries Development & Renovation said, citing the United States Geological Survey.