Iran is looking to complete the missing link in its production chain through Mobarakeh Steel’s recent initiative in Afghanistan. But competing in a multi-billion dollar arena with established players will be a horrifying challenge.
According to Irasin News, in today’s steel industry, the game starts in a deep underground, not a factory. Twenty years ago, major steel producers were primarily raw materials buyers and outsourced mining to specialized companies. Today, most of these companies consider themselves the owner of the mine.
This shift is not simple. It is supported by years of experience navigating global iron ore price fluctuations, the maritime transport crisis and export restrictions in mining countries. In all competitive global markets of iron ore and coking coal, security in supply chains with no direct ownership or mine interests has become nearly impossible.
Global benchmark for steel producers in mining industry
The major steel manufacturers don’t just pursue security. They will redesign their business models so that mining and steel form an integrated chain.
China is locking steel on a world map
China Baowu, the world’s largest steel producer with annual production of over 130 million tonnes, owns and holds strategic stakes in more than 20 major iron ore projects. From Australia and Africa to Mongolia, the company has invested billions to secure its raw material supply. Investments in iron ore mines and joint ventures in Guinea, Brazil, exemplifies this policy. Importantly, Baowu will not only acquire the mines, but will also build dedicated rail lines and export terminals, ensuring independence from the open market during the global transport crisis.
Europe commands steel from mines to markets
ArcelorMittal, a European giant with operations in over 60 countries, implements a “full chain” model. From managing iron ore mines in Canada and Ukraine to owning caulking coal mines in Kazakhstan, every move aims to reduce market dependence and manage production costs. During the 2021 crisis, when global coking coal prices exceeded US$600 per tonne, Arcelormitt included a surge in prices, primarily using internal resources.
Asia protects steel through partnerships and contracts
Japanese and Korean producers also have a wide range of models, but are now entering this field. Nippon Steel and Posco prefer joint ventures with mining companies over full ownership. These contracts often include long-term off-take agreements, guaranteeing raw material supply for up to 20 years with advance pricing. Investing in Australia, India and Indonesian mines is part of this strategy.
Mines in Africa and Canada: The Benefits of Indian Steel
Two major steel manufacturers in India, Tata Steel and JSW Steel, have acquired stakes in the mines in Africa and Canada, in addition to developing domestic sources. Tata Steel, which owns Mozambique coal mines and Canadian iron ore, secures both energy and raw materials. Their goal is to expand exports to markets in Africa and Southeast Asia, as well as domestic supply.
These examples show that top steel manufacturers view mining not only as a source of material, but as springboards for market expansion, local value creation, and logistics cost control, reducing risk and increasing production stability.
Mobarakeh Steel’s Bold Move to Afghanistan
In recent years, Iran has recognized the need for direct investment in external minerals. Mobarakeh Steel, the largest steel plate producer in the Middle East, fully utilizes downstream capacity, but future growth will depend on safe sources of raw materials.
Saeed Zarandi, CEO of Mobarakeh Steel Group, explicitly stated at the Iran and Afghanistan economic forum that the company is ready to make practical investments in Afghanistan. These investments include iron ore beneficiaries and pelletized plants, as well as transnational special industrial zones.
Current MOBARAKEH steel capacity:
•18 million tonnes of pellet production
•11 million tons of steel billet (100% use)
Production of steel sheets over 8 million tons
These figures indicate that the intermediate and final links in the production chain are fully operational, but the raw material supply bottleneck has become a key point for future expansion.
Unexplored Afghanistan Reserve: Fuel for Iran’s Steel Exports
Afghanistan is not only rich in iron ore reserves, but its geographical location provides a potential export corridor for Iranian steel. Investments in Afghanistan mines and local processing will provide access to the Central Asian market, China and even India. Zarandi also emphasized that Mobarakeh Steel is ready to transfer technical knowledge and train Afghan officials to promote industrial development in both countries.
Afghanistan mines’ billion-dollar challenge
Entering the mining sector in Afghanistan, both opportunities and challenges are presented. The presence of established Chinese, Indian and European players creates fierce competition for concessions. Iran needs to strengthen its logistics infrastructure and adopt innovative financial and legal investment models. Otherwise, its existence remains limited and short-term.
What’s clear is that with this new approach, Mobarakeh Steel has taken the first step towards joining the Global League of Mining Steel Maker. Effective competition requires billions of dollars in investments, international partnerships and meticulous planning of the transportation chain. Without these measures, raw material shortages over the next few years remain a lasting threat.
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