The iron ore producers’ and exporters’ association of Iran (Iropex) intends to target Saudi Arabia as a new market, despite poor relations between the two countries.
Iropex head of international affairs K. Jafari Tehrani says that Iranian iron ore mining companies and traders should aim to switch sales from China to Saudi Arabia as the later seeks to develop its steel sector. Tehrani added that there are only six years remaining for such a move. By 2020 Saudi Arabia will be ramping up domestic production and output from captive developments in Africa, reducing the country’s need for alternative supply sources.
Saudi Arabia currently imports about 14mn t/yr of iron ore, according to Tehrani, 8mn t of which goes to the Hadeed Saudi Iron and Steel company, a subsidiary of the state-owned Sabic group. Brazil and Sweden are Saudi Arabia’s two main sources, both supplying high-grade ore of more than 61pc Fe. Saudi Arabia has around 400mn t of iron ore reserves but the average grade is said to be below 40pc.
Iropex emphasised lower freight costs between Iran and Saudi Arabia, claiming that shipping from Brazil and Sweden to the ports of Jeddah or Dammam are $25-30/t. Iranian export facilities at the ports of Bandar Abbas and Imam Khomeini are considerably closer and hence freight rates are lower.
But Sabic is already looking to Africa to supply Saudi Arabia’s growing iron ore needs. At the start of this year Sabic formed a joint venture with Mauritania’s state-owned mining firm Snim to explore for iron ore in the west African country. The joint venture’s new company, Mauritania Saudi Mining and Steel (Takamul), is developing the Atomai mines in Zouerate, northern Mauritania.
