MEETING NEEDS

Iran 2017 | INDUSTRY & MINING | INTERVIEW

TBY talks to Dr. Bahman Akhavan, Managing Director of Iranian Aluminium Company (IRALCO), on strengthening the aluminum industry.

Dr. Bahman Akhavan
BIOGRAPHY
Dr. Bahman Akhavan attended Arak University, where he received his bacelor’s degree in law and his master’s degree in sociology. Subsequently he did a PhD in sociology at Arak University. Akhavan was a Member of Parliament and served three terms. Currently, he is the Managing Director of IRALCO.

What is the impact of the aluminum industry on Iran's economy?

Because Iran is rich in energy, we can benefit from its availability at low prices. Iran produces 355,000 tons of aluminum per year and consumes 426,000 tons, and the country is a large importer, at 252,000 tons per year. Aluminum consumption has increased significantly since 2004, on average by 9% per year. Considering this trend, consumption will reach 655,000 tons in five years. The capacity in the downstream aluminum sector, such as sheets, strips, tubes, dishes, and gussets, is about 800,000 tons per year. At this moment around 5,000 people work directly for IRALCO while some 11,000 work in related factories and workshops. The aluminum-dependent industries employ 25,000 people in total.

Iran seeks to significantly increase its aluminum output toward 2022. How will IRALCO contribute to increasing Iran's production capacity?

We want to develop the aluminum industries, meet local requirements, and obtain foreign exchange incomes through exports. Also, we want to reduce operational costs and invest in local aluminum production units. The Iranian Mines and Mining Industries Development and Renovation Organization (IMIDRO) assigned IRALCO to formulate a long-term plan for the aluminum industries. IRALCO developed a framework for the production of 1 million tons of primary aluminum, 2 million tons of alumina, and 450,000 tons of petroleum coke. Iranian Alumina Development is set to produce 280,000 tons of alumina per year, while Almahdi Aluminium Complex will produce 110,000 tons. Hormozal has a target of 147,000 tons of alumina while IRALCO will have a total alumina production of 220,000 tons. The framework also includes downstream plans and plans to meet the need for bauxite.

What is necessary to strengthen the competitiveness of Iran's aluminum industry?

Despite the comparative advantages for aluminum production in Iran, aluminum prices are still higher than in other countries in the Gulf region. Therefore, it is necessary to reduce costs. It is important to do so if we want to meet the industrial development aims in the aluminum sector: providing domestic needs as well as earning foreign exchange incomes through exports. We want to conclude long-term contracts with major international suppliers for alumina, petroleum coke, and anode in order to obtain high-quality raw materials at low prices. We also want to reduce our electricity costs. Since most aluminum producing countries have granted electricity subsidies to the aluminum sector, it is important that the government grants us the same advantage. We constantly seek to improve our costs parameters, which are related to the costs of electricity, raw materials, and manpower to have a certain output. Modern technology can help us with this.

You recently negotiated with NALCO from India for the supply of raw materials. What will be the benefits of this partnership?

NALCO is one of the largest producers in India of high-quality alumina-powder, the most important raw material in the aluminum industry. IRALCO has been registered by this company for direct purchases and to participate in short- and long-term tenders without any intermediate agents. Doing away with such dealers gives us a better price. Thus far, IRALCO has succeeded in providing and purchasing more than 460,000 tons of high-quality alumina powder at the best price. IRALCO is the only producer in Iran that is permitted to purchase from NALCO. In addition to enjoying competitive prices for these purchases, we have been able to use governmental foreign exchange reserves—Indian rupees—which has allowed us to save at least USD18 million.

What is your vision with regard to the international expansion of IRALCO and which markets are interesting to enter?

Around 35% of IRALCO's production goes to exports and 65% of production is meant for the domestic market. Turkey is our largest foreign client. The world resembles a global village and economic and commercial interactions have become international necessities. IRALCO pays attention to the global market in line with the promotion of its downstream industry. We know that IRALCO-branded ingot is of high quality, and we are interested in entering the European markets with downstream products such as ingots.

What is your outlook for the year ahead?

We want to have stable, reliable, and cheap access to sources of alumina and carbon products. This aim can be reached through investments in the construction of alumina and carbon production plants. Another target for next year is to create a cooperative and clear market for aluminum-using industries. We want the Iranian Aluminum Syndicate to provide for its needs directly from IRALCO by making economic and cooperative units. In this way intermediate agents are omitted and the raw materials will reach the downstream industry directly. We also seek to implement certain renovation projects and invest in our manpower improvement plans, which will reduce production costs. I would also like to see electricity subsidies. Moreover, it would be helpful if the central bank set up credit lines with countries that produce raw materials for the aluminum industry. We would also like the central bank to provide us with facilities such as low-interest loans and letters of credit.