DUBAI (UNI) – An Indian company is in the race to buy one of West Asia's largest steel producing companies, the Isfahan-based Mobarakeh Steel Company of Iran.

According to a company official, who did not divulge the Indian bidder's name, a Russian firm has also shown interest, but the deal would only be completed after the Government launches a formal international bid for its sale.

The production of steel by the company in the past three years has been about three million tons annually, according to media reports.

Production is expected to touch four million tons by the end of the fiscal in March, the company official added.

Last week, Reuters reported that steel giant Mittal had expressed an interest in buying the MSC for $5-6 billion, ‘but the bid is highly unlikely to succeed’, the news agency quoted the company’s spokesman as saying.

MSC, which has annual steel production of 4.2 million tons, said Mittal made the approach two months ago, but the state was unlikely to surrender control of the company while it was cranking up output, Reuters added.

New steel mill to be built in Khoramshahr

In a conversation with mesteel.com, head of Planning and Development Department of Ahvaz Rolling and Pipes Company (Arpco) Dr. Arman said the company has planned to establish a new mill in Khorramshahr (a city in southwest of Iran, 110 km from Ahvaz, which is the capital of Khuzestan Province).

Arpco is an Iranian steel mill located in Ahvaz, producing hot rolled steel coils, black and galvanized tubes and pipes.

“Two years ago in cooperation with Inteco, an Austrian engineering company, we prepared the feasibility study and tender documents, to establish a new rolling mill in Khorramshahr.

“About one and a half year later we received the confirmation by the economy board of Iran and other governmental permits, to issue the international tender,” Arman added.

Out of eleven companies interested to participate in this tender, Arpco shortlisted five, amongst which Danieli (Italy), SMS Demag (Germany), Hatch (Canada), Techint (Italy) and Voest Alpine Industrial (Austria).

After analysis, finally Danieli Italy and SMS Demag Germany seemed to be in the final run.

Teams from SMS- Demag (Germany) as well Danieli (Italy) visited Iran in December 2005 and in February 2005 agreed to various buyers’ conditions.

Because of the complexity of the technology involved as well as of the recent political circumstances- mainly the discussions between European countries and Iran on the country’s nuclear plans-, SMS- Demag and Danieli have asked to send final conditions - proposals by late 6 May 2006.

To feed the melt shop a direct reduction plant will be constructed by private sector close to the mill.

Iran’s Industries and Mines and Ministry has promised to supply pellet from Gol-e Gohar, an iron ore mine near the central city of Sirjan in the Kerman Province. Most of the required scrap will be imported.

Khorramshahr steel mill will have a capacity of up to 2 million t/y of HR coil, but will start production initially of one million t/y of which 125 t/y will be stainless steel coils and 875 t/y will be carbon steel hot rolled coils.

The production range will be from 0.9 to 20 mm thickness and up to 2000 mm width.

An agreement is expected to be finalized within the next 3 months.

The construction of the mill could start five months after the award.