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January 13, 2016 01:00 AM

Iran set to break ground on $222M tire plant

Crain News Service
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    By Shahrzad Pourriahi, Crain News Service

    LONDON (Jan. 13, 2016) — A privately held Iranian group, Sabalan Tyre Co., plans to break ground soon on a $222 million radial tire plant in Sanandaj, Kordestan Province, and is in talks with major European tire and machinery companies about the project, a senior company executive told European Rubber Journal.

    A groundbreaking ceremony, scheduled for Jan. 5, was postponed as senior government officials were unable to fly in to the western province due to bad weather, explained Kamran Afshar-Imani, vice president and member of the board of directors at Sabalan Tyre.

    “There are talks about a ceremony on Feb. 11,” said Mr. Afshar-Imani, pointing to nationwide celebrations to mark Iran's Islamic Revolution.

    “In any case, it will be very soon — within the next couple of months,” he added.

    As for the technology and machinery in the plant, the vice president said Sabalan Tyre was holding discussions with leading European companies.

    “We have been having talks with a few European companies and we are in advanced stage of talks with one of them, and would like to even take their brand if they're interested,” he said.

    That company, according to Mr. Afshar-Imani, is Pirelli & C. S.p.a. The firm also has signed a letter of intent with Germany's HF Group and is negotiating with the Netherlands' VMI Epe, he added.

    Mr. Afshar-Imani said there's an appetite in Tehran to get European companies on this project, as international sanctions are set to be lifted in January.

    “Even in terms of finance, we do have the option of having an LC [line of credit] opened for us by Chinese banks, but we would rather finance the project through European banks,” he said.

    The project is to be partly financed by foreign banks and partly by the state.

    “If we manage to get the financing sorted, then we can expect the project to complete by early 2019,” he added.

    Construction work on the 50,000 metric ton/year plant is expected to start by this spring, Mr. Afshar-Imani said. Some 30 percent of the plant's products will be all-steel light truck tires and the rest will be passenger/SUV tires.

    Razi Industrial Group will own 81 percent of the shares in the project while Iran's state-owned Industrial Development and Renovation Organization (IDRO) will have the remaining 19 percent.

    Part of Razi Industrial Group, Sabalan Tyre is owned and run by entrepreneurs the Ganji brothers, who have two other tire projects: Artawheel Tire in Ardabil province and Yazd Tire in the central province of Yazd.

    Sabalan Tire is one of four tire projects being pursued by the Iranian government to add 200,000 tons per year of local production capacity in the country.

    Three of the four projects will be built in partnership between IDRO and private investors.

    The fourth — to be constructed in Pakistan-bordering Sistan-Balulchestan province — will be championed by IDRO alone, as it has not been well received by private investors.

    The construction on the first project, operated by Nikro Gostaresh Khorramabad Tire Co., started in July 2015. The company is headed by Amirali Zohreh-Nejad, an Iranian entrepreneur whose father currently imports tires into the country.

    The final project, championed by Mitra Farzadnia, is to be completed in Kermanshah Province, where Ms. Farzadnia has her own tire cord company.

    This report appeared on the website of European Rubber Journal, a United Kingdom-based sister publication of Tire Business.

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