China, India raise alumina sales to Iran after U.S. tightened sanctions

Iran has hiked purchases of alumina from China and India in the past two months as the country scrambles to shore up supply after the U.S. tightened sanctions on raw and semi-processed materials at the start of July.

Western measures targeting Iran's disputed nuclear programme have hit many sectors of its economy including industries producing steel and other metals, where it is heavily dependent on imports. Tehran says its atomic work is peaceful.

Tightened U.S. sanctions came into effect on July 1 that extended a ban on aluminium metal to cover raw and semi-finished metals as well. China and India have won waivers from any U.S. sanctions on their financial system related to trade with Iran because they have cut imports of Iranian oil.

China's alumina exports to Iran jumped to record levels in June and July, customs data shows, while India's national aluminium producer has awarded an alumina tender to Iran's national smelter in the past two months, company sources say.

Alumina is a refined version of the raw ore bauxite. It is typically used to make aluminium, but in its high purity form it can have sensitive military applications.

But the price of the material would indicate that Iran's imports from China and India are likely to have been of lower quality smelter grade alumina rather than the high-purity material known as chemical grade, traders said.

Chemical grade alumina can have military uses, such as to make ceramic composites used in missiles and armour.

The prices Iran paid for the material from India and China were less than a quarter of that for chemical grade material.

China, the world's top producer and consumer of alumina, exported 15,072 tonnes to Iran in July and 15,078 tonnes in June, customs data showed.

That compared with sales to Iran of 553 tonnes for the whole of last year, out of China's total 2012 alumina exports of 43,293 tonnes, customs data shows.

Iran has been paying a premium to domestic Chinese prices, making the metal attractive to re-export rather than import into China, traders said.

In India, the National Aluminium Co Ltd (NALCO) has awarded a sell tender to the Iran Aluminium Company (Iralco), two sources said.

NALCO company officials, including Chairman and MD Ansuman Das declined to comment on the tender award.

A senior official at India's mines ministry, under which state-owned NALCO operates, said the government was not looking into the issue but could investigate if required.

"In general, we do not have anything against trade ties with Iran," the official said.

NALCO said last week it planned to raise its alumina exports by 40 percent to 1.4 million tonnes this fiscal year to help India increase dollar inflows as global investors dump emerging market currencies anticipating the gradual end to U.S. stimulus.