It is important to note that aluminum consumption is a direct function of macroeconomic indicators and has the most consumption compared to other metals with regard to economic growth, income and particularly urbanization, so according to the decision of The United Nations Commission on Sustainable Development (CSD) it has been introduced as selected metal to meet the current needs of people without depriving future generations of his rights.
Moreover, as aluminum retains 95 percent of its original energy and is 100 percent recyclable, it has been called energy and material bank. Considering the high share of energy in its final costs of production and its capability in converting energy in one hand and the top spot of Iran in global gas reserves with 33.6 trillion cubic meters of reserves in other hand, production of the metal would be an energy advantage for Iran; so converting every 9,000 cubic meters of gas to one ton of aluminum provide the opportunity for the economy and future generations to export solid energy. In other word, with conversion of just two phases of South Pars gas field to more than 5 million tons of aluminum within 10 years, Iran can and should be placed as top producer of aluminum in the world. The importance of the issue becomes more obvious when we notice the fact that gas rivals are always trying to prevent Iran from supplying huge consumer markets like EU and China. Hence export of solid energy in addition to value added, job creating and boosting local economy, is the best option to emerge from current situation and is the most important component of resilient economy.
In addition to energy advantage, Iran has concessions for exploiting 600 million tons of bauxite - a raw material used in aluminum production – in Guinea Conakry that has the world's largest bauxite reserves so the country is placed in a unique and competitive position in regional and global level for aluminum production.
However, with the production of 350,000 tons of aluminum in 2013, Iran has just 0.7 percent share in global output of the metal and with 4 ranks improvement, is the 17th largest aluminum producer. But as consumption growth rate was double the production and along with increasing demand of global market for the metal, the country faced with aluminum deficit in the past year. One of the most important new markets for aluminum is auto industry that uses the metal as replacement for steel in car body, resulted in dramatic expansion of aluminum rolling mill building to produce car body sheet in the past two years.
The major primary materials for aluminum production include hydrocarbon reserves and minerals reserves with equal share in final costs of production. Today the main factor determining competiveness in aluminum industry development is access to plentiful energy resources. Despite the fact that Iran hasn’t advantage of minerals resources of the metal but is rich in hydrocarbon reserves. Importance of the issue highlights more when we notice aluminum production using natural gas powered plants has accelerated in past decades so that in the past 40 years, the share of other fuels including hydropower, nuclear and oil in the electricity production supplying primary aluminum industry has decreased respectively 26 percent, 40 percent and 100 percent; however natural gas consumption for electricity production supplying the industry has grew by 80 percent. So making more prominent the role of natural gas in the development of aluminum industries considering the huge resources of the fuel in Iran provide great opportunity for the country to create value added from this advantage.
The domestic market on the rise is one of the other advantages of aluminum industry development in Iran. According to the estimates, minimum primary aluminum demand of the country in the end of the 5th Economic Development Plan would be 600,000 tons and in maximum more than one million ton. In the outlook of Iranian calendar year of 1404 (2025), minimum consumption is forecasted by one million ton and in maximum close to two million tons. So maximum use of domestic market advantage and decrease aluminum ingot barter to supplying imported raw materials appears inevitable necessity.
One of the constant challenges of the preponderant and energy intensive industry has been its anonymity among a lot of officials and policy makers of the country. The consequence of this negligence was loss of opportunities and giving them up to rival countries and hubs especially in southern part of Persian Gulf to the extent that the current output of these countries is 10 times more than Iran as first aluminum producer in the Middle East.
Other challenge of aluminum industry is related to its structure and management. Elimination of holding company, ineffective changes along with ignoring the veterans and qualified individuals of the industry especially during the past few years caused irreparable damages to the industry.
Other important challenge is the sustainable supply of electricity through separate power plants as integrated part of the industry hasn’t been addressed properly by authorities, companies and producing complex in the past few years. As a result of the failure and in the current situation, about 50 percent of Hormozal capacity production, since its launch in 2008, hasn’t been activated yet, thereby it endured irreparable damages. It is noteworthy that electricity in aluminum industry isn’t just energy carrier and consumption driver but accounts as material and feed so it’s necessary to put on agenda building aluminum plants with highly efficient combined cycle power plants.
Also the experience from first phase of targeted subsidies plan demonstrated that vulnerability of the aluminum industry despite being energy intensive has been lower compared to other metals and basic commodities. However if the policy of energy conversion is still on the agenda, with especial attention to technology and productivity, it’s necessary to take proper measures to set gas price for aluminum industry in order to keep its competitive edge.
Fortunately since the new government came in power and its viewpoint on energy and aluminum industry, significant policies, plans and measures have been devised to emerge from current situation and overcome the challenges
The most important among these measures and plans include opening line of credit for 300,000 tons South Aluminum project with technology of 400 kilo ampere, start of operation of combined cycle power plants with BOO method, definition of investment complete package for alumina and aluminum using Guinea’s bauxite and gas of Asaluyeh, study and planning for formation of the industry chain in especial free zones of Persian Gulf from building petroleum coke plant in Arvand Free Zone in Khuzestan province to building smelter in Chabahar Free Zone in Sistan and Baluchestan province as well as alumina and industrial salts production from nepheline syenite in Sarab.
It’s noteworthy to mention that with implementation of South Aluminum in intensive energy industries Special Zone based in Lamard, Fars, Masjed Soleyman Kaveh Aluminum in Khuzestan, Jajrom Aluminum in North Khorasan, third phase of Al-mahdi in Bandar Abbas and Iralco development in Arak, aluminum production capacity in Iran will reach to more than one million ton in coming years and with implementation of projects including Guinea bauxite, Persian Gulf alumina in Asaluyeh and alumina production from nepheline syenite in Sarab, East Azabaijan, alumina production capacity will increase to two million tons.