Scarcity of alumina poses hurdles to the development of Iran’s aluminium industry

Iran has about 350,000 tons of yearly aluminium output capacity and the country is endowed with potential for the development of a successful aluminium industry. The country has cheap power as it is endowed with immense natural gas reserves. Qualified yet cheap labour force, production technology and growing domestic market also contribute towards the opportunities for such a development.

Despite Iran’s possible advantages in the industry, lack of raw material reserves pose a hurdle in realizing the potential, as said by Iranian Mines and Mining Industries Development & Renovation Organization's aluminum advisor, Mohammad Ashofteh Ajbisheh.

Iran’s southern neighbours too have no bauxite mines, and some of them have partnered with certain African, Brazilian and Australian companies for procurement of raw materials.

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“Our neighbors were able to turn this into an advantage by signing 10-20 year deals with global mining firms. Of course, they were never hindered by sanctions [like Iran was],” he said.

Iran’s aluminium depends on imported alumina imports which are cheaper in comparison to domestic alumina production. Each ton of alumina manufactured at Jajarm Alumina Plant costs $295. The country’s only source of bauxite is the Jajarm Mine in North Khorasan Province which has a reserve of less than 20 million tons. The country is buying alumina at a premium compared to international market prices.

Data shows the price paid by Iran for alumina in July was close to $280 per ton, while the global average alumina price index stood at around $240.

Iran has already signed a deal with Guinea for exploration and extraction of 600 million tons of bauxite from its deposits at central Guinea. The exploitation of the mine is set to begin by March 20, 2017.

Mehdi Karbasian, the head of IMIDRO, is in talk with some of the major mining companies, namely the NFC Group, MMC and Chinalco Mining Corporation in China for expansion of Iran’s aluminium industry.