12212014Sun

China signs steel deal in Iran

The Wall Street Journal

By CHUIN-WEI YAP

BEIJING—A large Chinese state-owned company said it signed a $712 million dollar contract to help build a steel plant in Iran, signaling that Beijing isn't ready to join Western nations in increasing pressure on Tehran over its nuclear program.

A unit of state-owned metals giant China Nonferrous Metal Mining Group said in a statement Wednesday it will provide engineering design, equipment supply and installation, construction and training services for the Iran Butia steel plant.

China has consistently defended its economic ties with Iran, which is under U.S. and European Union sanctions for its alleged nuclear weapons program. Five months ago, China's foreign ministry urged Washington to revoke sanctions it had imposed on Bank of Kunlun Co., a unit of China National Petroleum Corp., warning that they damaged China's interests and Sino-U.S. relations.

China and Iran have normal, fair and transparent business relations in the areas of energy and trade, foreign ministry spokesman Qin Gang said at the time.

China Nonferrous' Shenzhen-listed engineering and construction arm—China Nonferrous Metal Industry's Foreign Engineering & Construction Co. 000758.SZ +1.20% —will handle the work. The latest deal adds to the company's nearly decade-old history in Iran. When complete in four years' time, the plant is expected to be able to produce 2 million metric tons of sponge iron and 1.5 million tons of steel billets a year.

China, like other big buyers of Iranian oil, has slashed its oil purchases from Iran, and in so doing has escaped threatened U.S. sanctions against importers of Iran's oil introduced a year ago.

In the first 11 months of last year, customs data show the country imported an average 356,000 barrels a day of Iranian crude, down 22% from a year earlier, although the extent this was the result of U.S. pressure or a Sino-Iranian dispute over crude pricing, which disrupted shipments in the first few months of the year, is unclear.

A new test of China's resolve to maintain its economic and political ties with Iran, and Washington's readiness to confront Beijing, will come in May or June with the next six-monthly review of whether buyers of Iranian crude are continuing to reduce their shipments.

China Nonferrous' unit has several other projects in Iran, mostly assisting Iranian companies building factories producing aluminum, alumina and ferroalloys. China Nonferrous didn't respond to a call for comment Wednesday.

The deal is unlikely to be aimed at supplying China with Iranian steel. China's steel sector suffers from overcapacity, and imports account for barely 2% of its total steel consumption.

However, Iran is a long-standing, albeit small-volume exporter of iron ore to China, trailing major suppliers Australia, Brazil, India and South Africa. China heavily depends on iron-ore shipments for steelmaking.

Though Tehran provided just 2% of China's total ore imports, Beijing has long nurtured Iran among a slate of alternative suppliers to offset other exporters' domination of the trade.

Despite a recent spat over Chinese commerce ministry accusations in December 2011 of fraud in Iranian iron-ore sales, China kept the volume of imports from the country unchanged at nearly 16 million tons last year.

The China Nonferrous deal might not trigger strong protests from the U.S. given the relatively small scale, and steel's less strategic role compared with crude oil.

"Energy is a major revenue source for Iran, while metals account for relatively less, so I don't think this will be as big of an issue," said North Square Blue Oak analyst Frank Tang. "In any case, even against [the risk of] international sanctions, it's not been the case that China always follows international decisions."

The value of Iran's crude sales to China in the first 11 months last year reached $15.7 billion, a sizable chunk of an overall $50 billion in bilateral trade, according to government data. Trade in iron ore in the same period was valued at near $1.7 billion.

Search

Act of Cowardice

Iran's ruling tyrants have executed yet another political prisoner in flagrant violation of international law.  READ MORE

The rush to Tehran amidst rise in executions

World leaders should halt these visits and link any deal with Iran to its human rights record.  READ MORE

Arming a dictator

What if President Obama ordered the sale of arms to Syrian dictator to massacre his opponents? READ MORE

Slaughter intensifies under Rouhani

231 executions have occurred since the presidential election in June which brought to power Hassan Rouhani. READ MORE

Silence is not the answer

Iran: Bloody crackdown targeting dissidents aims at terrorizing the people into submission. READ MORE

Iran’s Murder Machine

The wheels of Iran's Murder Machine turn in tandem with its nuclear machine. READ MORE

What now?

The West must drop the dangerous pretence that talking to a regime not interested in listening constitutes the winning strategy. READ MORE

A facelift

This cosmetic facelift should not dupe the West into thinking that there are fresh prospects for a nuclear deal. READ MORE

An Act of Cowardice

The terrorist attack against Iranian exiles at Camp Liberty, Iraq, is another sign of Iranian regime's weakness. READ MORE

Much atalk about nothing

In Istanbul they merely agreed to talk about talking later in May in Baghdad, of all places. READ MORE

An unholy alliance

The brutal state-imposed bloodbath in Syria deserves uncompromising reproach. READ MORE

Iran cries for freedom

The clerical regime in Iran has predictably unleashed another wave of terror against the citizenry since the outburst of the latest string of mass protests beginning on 14 February. READ MORE

A new Iran policy

The latest round of nuclear talks had an all-too-familiar result: more time for Tehran and less time for the international community to prevent a nuclear-armed theocracy. READ MORE

Murder overlooked

What would the rest of us do if a mad gunman was in our midst, systematically murdering our fellow human beings in front of our eyes? The responsible amongst us would not look the other way, because that would serve as a source of encouragement for the murderers to carry on with their heinous acts unchecked. READ MORE

Standing up to Iran's executioners

The Iranian regime's malicious noose has yet again taken an innocent life. Political prisoner Ali Saremi, 63, was hanged in Tehran's infamous Evin prison after a lifetime of peacefully espousing human rights and democracy. READ MORE