Iran breaks ground on third tire plant

Zabol, Iran – The Iranian minister of mining, Mohammad Reza Nematzadeh, officially broke ground on a 50,000-tonne/year tire plant in south-eastern Iranian city of Zabol 10 March.

Located in the Pakistan-b0rdering Sistan-Baluchestan province, the Arya Hamoon Tire project is one of the four greenfield tire plant projects pursued by the Iranian government and is led by the Industrial Development and Renovation Organisation (IDRO).

The plant will be set up in Ramshar Industrial Zone in an area of 50 hectares, and is expected to create 1,400 jobs once completed.

The plant will produce 25 kilotonne per annum (ktpa) of passenger car and light truck tires and 25 kpta of heavy commercial vehicle tires.

Unlike the other three projects, where in IDRO has a 19-percent share in the project partnering with the private sector, this project is completely owned by IDRO, mainly due to lack of interest from local investors.

Speaking to ERJ, head of IDRO industrial operation projects, Reza Allahyari, said a tender had been held for the project, with 19 companies placing their bids to carry out the engineering, procurement and construction of the plant.

“Eight of the companies are Iranian, eight are Chinese and three are European,” explained Allahyari.

Any winning contractor, he added, will have to procure 25-30 percent of the project from local resources. In addition to that, they will definitely have to procure the main machinery from European sources.

“When we were drawing up the tender documents, the state of Iran in terms of sanctions were not clear and we came up with two provisions. We said each bidding party could place two bids, one with mainly Chinese suppliers and one with mainly European suppliers,” the IDRO boss added.

That way, he explained, the bidders can give us the best they can provide in two scenarios.

“They will also have to provide an international financier, which will provide part of the funding for the project, along with the Iranian Industries and Mines Bank providing for the Iranian finance bit,” he added.

According to Allahyari, among the European companies that have held negotiations with IDRO are VMI and HF, while China’s Mesnac and Double Star have had some talks with the company as well.

“We even had some talks with Pirelli, but it looks like because they are in a transition point with their Chinese buyers, they are not ready to get engaged,” he added.

See the full report in March/April issue of ERJ magazine.