According to the Trade, Mining, and Steel News Agency, severe restrictions on electricity and gas supply over the past four years have posed a fundamental challenge to Iran’s steel industry, resulting in the loss of 26 million tons of steel production and an economic value of over $14 billion. Meanwhile, the Khuzestan Steel Company, as one of the strategic pillars of the country’s steel value chain, despite having extensive infrastructure and high operational capacities, is currently facing a crisis of unstable power grid, which endangers the continuation of production, job preservation, export promotion, and the guarantee of large investments.
The Khuzestan Steel Complex, which has become the second pole of Iran’s steel production, the largest supplier of steel ingots, and the main provider of raw materials for downstream industries over more than four decades of activity, is now facing a bitter paradox. With a nominal capacity of 4 million tons of steel per year, due to energy imbalance and restrictions on the use of electricity and gas, the company has not been able to utilize its real potential, and its production has decreased to less than 3 million tons. It is worth noting that this production decline is not due to a lack of raw materials, technological weakness, or lack of target market, but is solely the direct result of energy restrictions.
Examining the statistics from 2021 to 2024 shows that the main problem of Iran’s steel industry is not a lack of production capacity, but rather the deprivation of utilizing the created capacities. Khuzestan Steel, with the benefit of the country’s largest iron sponge production megamodule and simultaneous access to rail, road, and sea transportation networks near export ports, has all the prerequisites for development, but energy restrictions have prevented the realization of these goals. This production stagnation is not limited to one company and has a chain effect on the performance of units such as the National Industrial Steel Group of Iran, Khuzestan Oxin Steel, Ahvaz Rolling and Pipe, Kavian Rolling, and other downstream industries, resulting in reduced feedstock in all production stages, from projects to construction and automotive industries.
In a situation where the increase in energy carrier costs has put additional pressure on producers and reduced the economic efficiency of steel units, recent attacks and damage to infrastructure have doubled the need for stable power supply. Khuzestan Steel is rebuilding its damaged capacities while production for this complex is more than an economic indicator; it is the only source of financing for reconstruction, preserving the employment of 17,000 personnel, and supporting 50,000 direct and indirect jobs in the southern part of the country.
Finally, analyzing the current situation shows that the solution to this crisis is not building new factories, but rather reforming energy supply policies and optimizing the use of investments made. Accepting the reality that billions of dollars cannot be spent to create production capacity and then left unused due to power shortages is the first step to saving the steel value chain and the national economy.