The United States’ sanctions on Iran’s metal sectors “will undoubtedly affect the Kurdistan Region, but not to the extent that it will sabotage the metal sector in the Kurdistan Region," Gaylan Haji Saeed, head of the Union of Importers and Exporters of Kurdistan Region, told Rudaw English.
In 2017, the Kurdistan Region imported 2.1 million tons of steel, according to the most recent figures from the Ministry of Trade and Industry. About 1.5 million tons of those imports came from Iran, Saeed estimated.
United States President Donald Trump slapped sanctions on Iran’s metal sectors last week, one year after he withdrew from the nuclear accord and the same day Tehran declared its intention to restart some nuclear activities if its fellow signatories did not deliver on promises to shore up the oil and banking sectors, measures that could save Iran's limping economy. The new sanctions apply to sales and transport of Iranian iron, steel, aluminum, and copper.
There is currently no domestic iron ore mining in the Kurdistan Region or Iraq. Geological surveys indicate Iraq has usable deposits of iron ore, but, like the mining sector in the Kurdistan Region, it is undeveloped.
The Kurdistan Region imports “steel rods, pipes, oil pipes, aluminum, and I-beams” from Iran, said the head of the import union Saeed. Iranian products are preferred, especially since the currency plummeted in value because of US sanctions, he explained.
There are nine steel factories in the Kurdistan Region, seven producing rebar and two making pipes. Annually they produce 2.4 million tons of reinforced rebar and 240,000 tons of pipes, according to ministry figures. Ninety percent of the product is sold to the rest of Iraq.
The sector could double its output, according to an industry manager, saying they work at half capacity because of competition from foreign imports.
"We work at less than 50 percent of our capacity. Thus, even if metals are banned from entering Iraq, I don't think that will have much impact because Iraq's factories can meet Iraq's needs for reinforced rebar," Omer Ismael, manager of Mass Company for Metal and Steel, told Rudaw. Even working at half capacity, Kurdistan Region's metal factories meet 80 percent of Iraq's steel needs, including all of Iraq’s need for reinforced rebar, he explained.
Thirty percent of his company’s product consists of Iranian sponge iron, but that can be replaced by the abundance of scrap existing now in Iraq’s cities. Even if imports from Iran cease, “work won't stop because, God willing, there is a plentitude of scrap in Iraq. It can suffice for three to four years," said Ismael.
If they do have to import raw materials from gulf countries, Turkey, or elsewhere, prices will go up, said Ismael. "They might cost $30-$40 more due to transportation costs."
The industrial materials sector is Iran's largest non-oil-related source of export revenue, accounting for 10 percent of its export economy, according to a statement from the White House. Industry analysts in Iran believe sanctions will not prevent their exports.
"The US cannot completely stop exports. Some countries, companies with no US ties, are OK to work with Iran," industry analyst Mojtaba Fereydouni told AFP.
"Also our main export markets are our neighbours – Iraq and Afghanistan, and recently Syria and Oman,” he said.
Trade between Iran and Iraq stands at $12 billion and both countries have expressed the desire to increase that to $20 billion.
Trump pulled out of the nuclear deal one year ago, labeling Iran the world's largest state sponsor of terror and demanding Tehran rein in its regional activities. A year on, Iran's currency has lost over 60 percent of its value, factories have been closed, and unemployment has jumped.
Reporting by Zhelwan. Z. Wali and Mohammed Rwanduzy
