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Khuzestan Steel Mill in Iran Shuts Down Due to Power Shortage

Khuzestan Steel Mill in Iran Shuts Down Due to Power Shortage

Steel NewsDate: 31-08-2023 by: Nhu Quynh

Khuzestan steel mill has been forced to halt operations and put workers on mandatory furloughs due to the power shortage crisis in Iran.

Khuzestan steel mill is considered one of Iran's three "rich man steel industries" and owns many production lines manufactured by German, Italian, and Japanese companies. The closure of Khuzestan was initiated after production activity decreased due to intermittent power outages.

Khuzestan steel mill in Khuzestan Province, located in southwestern Iran, has large oil reserves where people struggle with hot weather and frequent power outages. Accordingly, the factory will lose about 15 million dollars every day after shutting down. However, according to statistics, the loss does not stop there because many businesses in different fields that depend on the steel industry also suffer losses.

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The company's CEO, Amin Ebrahimi, shared that the plant is being repaired and maintained regularly to meet production needs, but he did not confirm the shutdown of the Khuzestan steel mill. He cited the Department of Energy when it announced a 29% increase in electricity supply to steel mills, claiming it would boost production.

According to the newspaper, at the beginning of 2023, Iran's steel production had plummeted due to severe electricity and gas shortages. Iran is always in the world's top 10 major steel exporting countries; however, in March 2023, Iran was removed from this list. Steel is one of the leading export items that bring in foreign currency for Iran in the context of oil and gas subject to US sanctions.

Accordingly, with the ongoing shortage of electricity, gas, and water in Iran, Iran implemented a two-day shutdown of businesses and steel mills across the country in early August. Besides, with hot weather causing increased demand for electricity for cooling, hydroelectric power plants produce electricity beyond their capacity, leading to the depletion of water resources. The continuous increase in temperature and decrease in rainfall across the country has adversely affected the operation of hydroelectric power plants, which is also the reason for the steel mill's closure.

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The steel mill shutdown results from a gap between electricity production and consumption. Currently, the shortage of electricity not only affects people's daily lives but seriously affects critical industries, including steel production. The lack of gas raw materials resulted in a sharp decline in Iran's steel production, and nearly 50% of the electricity supply to industries was also cut.

Although power plant capacity and fuel supply are insufficient to meet domestic demand, Iran still exports electricity to Iraq. The export of electricity through Iraq has overloaded the country's power grids and failed to meet its growth plan as expected. Iran's shortage of electricity, water, and gas is not only solved by shutting down steel mills but also needs to find a more optimal and sustainable solution.

MRS Steel has brought you information about the shutdown of Iran's Khuzestan steel mill. If you need to buy steel products, please contact us here.