Feasibility Study of Establishing a Galvanized and Colored Galvanized Sheet Factory

Feasibility Study of Establishing a Galvanized and Colored Galvanized Sheet Factory

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Abstract:

Steel industry is one of the main and biggest industries that has a great influence on Gross
Domestic Production (GDP) as there is a direct relationship between the per capita consumption
of steel and GDP. Creating different jobs, high dependence of downstream industries, usage in
infrastructures development and profitable exportation, have made steel a strategic product which
influences countries’ economy and is always considered in strategic goals and plans.

Reports of 2010 showed that Iran was among top twenty countries in steel production and recently,
Iran became the 14th steel producer in the world with 18 million tons of steel production in 2017.

Meanwhile, value-added increase in steel industry leads to upstream industries development and
in addition, completes production chain. Capacity of iron ore concentrate and Iron ore pellets will
increase from 31 and 22 tons to 50 and 48 million tons by 2018 and will reach 72 and 85 million
tons by 2025, respectively. In that case, Iran will get to the 7th rank in the world. Also, capacity
of sponge iron will increase from 22 million tons to 35 by the year 2018 and 54 million tons by
the year 2025.

According to Sixth Development Plan of Iran, the following items are among the goals of steel
industry development:

- Mining and manufacturing of steel products by building units according to global scales
- Constructing processing units to complete the value chain and increase value added
- Improving quality of mineral industry products based on global standards
- Achieving the production knowledge and upgrading technology level in all areas from
exploration to mineral processing
- Maximizing the use of internal power during engineering, constructional and operational
phases
- Promoting total productivity of the effective factors in the mining chain along with global
indicators
- Achieving Environmental Standard Indicators

Considering international business data analysis (2016), Iran exported $160 million worth of total
484 thousand tons (average price of 331 dollar per ton) of hot rolled steel (tariff code 720839 and
thickness of 3mm) to Italy, UAE, Spain, India, Oman, Portugal, Poland, Algeria, Belgium, Jordan,
England and Germany.

According to international customs reports, highest import value of hot rolled steel belongs to
Oman (Average price of 432 dollars per ton), and lowest value belongs to Poland (301 dollars per
ton) .

Advantages of Establishing Galvanized and Colored Galvanized Sheet Plants in Arvand Free
Zone:

Increase on per capita steel consumption in Iran, significant and rapid development of Arab states
in Persian Gulf region, proximity to Global Consumer Market (Persian Gulf countries), proximity
to the largest consumer market of neighboring countries (Oman), proximity to Steel industries and
ability to transform Iron ore to other fruitful products are among the advantages of Arvand Free
Zone for establishing a Galvanized plant.

Advantages of Investment in Arvand Free Zone:

 Inexpensive and proficient workforce
 Inexpensive energy
 Inexpensive Land
 Proximity to target market and raw materials
 Having the advantage of value added law
 20-year tax exemption according to Free Zones law
 Customs duties exemption to import machinery, goods and etc.
 Customs duties exemption to export products outside the free zone

Special geographical condition of Arvand Free Zone due to transit and strategic channels in
business routes and easy access to international waterways, and proximity to Basra (second largest
province of Iraq) has captivated international attention as an especial location for commercial and
business development.

Arvand Free-Zone is one of the biggest commercial terminals by enjoying proximity to Iraq.
Moreover, being the top oil product producer and possessing 8 mini refineries and offshore
engineering and construction companies have made great potentials for intensive expansion in this
region.

According to development plans and bilateral trades’ enhancement with Iraq there are good
opportunities for improving offshore engineering services, and developing oil, gas and
petrochemical industry.

Also, 20-year tax exemption according to Free Zones law, exemption from customs duties for
importing machinery and raw materials and exporting goods, special facilities for the transfer of
goods produced in the region to the mainland, easy and unrestricted currency exchange, and proper
situation for joint ventures, have made an intriguing situation for investment in Arvand Free Zone.