Iran’s Mobarakeh Steel Company Ranks Among the World’s Steel Giants

Iran is poised to reshape its steel production landscape through Mobarakeh Steel’s recent ventures in Afghanistan. This initiative aims to establish a critical link in its production chain, although competing in this multi-billion-dollar industry against established players presents significant challenges.

According to Irasin News, the contemporary steel industry dynamics have shifted dramatically. Today, the competition begins not in factories but deep underground. Two decades ago, major steel producers primarily sourced raw materials from specialized mining companies. Now, many of these companies have transitioned to owning their own mines.

This transformation is complex, supported by years of experience dealing with global iron ore price fluctuations, maritime transport crises, and export restrictions in mining countries. In an increasingly competitive market, securing the supply chain without direct ownership or stakes in mines has become nearly impossible.

Global Benchmarking of Steel Producers in Mining

Leading steelmakers are not only focused on security but are also restructuring their business models to create an integrated mining and steel production chain.

China Locks Steel on the World Map

China Baowu, recognized as the world’s largest steel producer with an annual output exceeding 130 million tons, owns significant stakes in over 20 major iron ore projects. The company has invested billions in securing its raw material supply across regions such as:

• Australia
• Africa
• Mongolia

These investments include iron ore mines in Guinea and joint ventures in Brazil. Importantly, Baowu not only acquires mines but also develops dedicated rail lines and export terminals, ensuring independence from open markets even during global transport crises.

Europe Commands Steel from Mine to Market

ArcelorMittal, the European giant operating in over 60 countries, follows a “full-chain” model. It controls iron ore mines in:

• Canada
• Ukraine

Additionally, it owns coking coal mines in Kazakhstan. This strategy aims to minimize market dependency and manage production costs. During the 2021 crisis, when global coking coal prices surged above USD 600 per ton, ArcelorMittal successfully contained price increases using its internal resources.

Asia Secures Steel through Partnerships and Contracts

Japanese and Korean steel producers have adopted alternate strategies. Companies like Nippon Steel and POSCO favor joint ventures with mining firms rather than full ownership. Their agreements typically include long-term Offtake Agreements, securing raw material supply for up to 20 years at pre-agreed pricing. Key investments in mines located in:

• Australia
• India
• Indonesia

African and Canadian Mines: India’s Steel Advantage

Indian steel giants Tata Steel and JSW Steel have also acquired stakes in mines across Africa and Canada while developing domestic sources. Tata Steel, for example, holds ownership in:

• Coal mines in Mozambique
• Iron ore mines in Canada

Their strategy focuses not only on securing domestic supply but also on expanding exports to African and Southeast Asian markets. These examples illustrate that leading steelmakers view mines as vital assets for market expansion, local value creation, and logistics cost control, ultimately reducing risks and enhancing production stability.

Mobarakeh Steel’s Bold Move into Afghanistan

In recent years, Iran has recognized the necessity of making direct investments in foreign mines. Mobarakeh Steel, the largest steel sheet producer in the Middle East, has fully capitalized on its downstream capacities. However, its future growth largely depends on securing reliable raw material sources.

Saeed Zarandi, CEO of Mobarakeh Steel Group, emphasized at the Iran-Afghanistan Economic Forum that the company is prepared to make significant investments in Afghanistan. These investments will include:

• Iron ore beneficiation plants
• Pelletizing facilities
• A cross-border special industrial zone

Current Mobarakeh Steel Capacity

• 18 million tons of pellet production
• 11 million tons of steel billet (100% utilization)
• Over 8 million tons of steel sheet production

These impressive figures indicate that while the intermediate and final links in the production chain are operational, the raw material supply bottleneck poses a critical challenge for future expansion.

Untapped Afghan Reserves: Fuel for Iran’s Steel Exports

Afghanistan boasts rich iron ore reserves and strategic geographic positioning, potentially serving as an export corridor for Iranian steel. Investment in Afghan mines and local processing can facilitate access to Central Asian markets, China, and even India. Zarandi also highlighted Mobarakeh Steel’s readiness to transfer technical knowledge and train Afghan personnel to foster industrial development in both nations.

The Billion-Dollar Challenge of Afghanistan’s Mines

However, entering Afghanistan’s mining sector presents both opportunities and challenges. The presence of established Chinese, Indian, and European competitors intensifies the race for concessions. Iran must enhance its logistics infrastructure and adopt innovative financial and legal investment strategies. Without these advancements, its presence in the Afghan market may remain limited and short-lived.

What is evident is that with this strategic approach, Mobarakeh Steel has taken a decisive step towards joining the ranks of global mining steelmakers. To compete effectively, substantial multi-billion-dollar investments, international partnerships, and comprehensive planning of the transportation chain will be essential. If these measures are not implemented, raw material shortages in the coming years will pose a persistent threat to the industry.

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