Golgohar’s Road to Internationalization

Golgohar Zone is one of the oldest Zones of iron ore extraction with several thousand years of mining history. By possessing half billion tons of Iron ore reserves, currently is one of the most active mining and industrial zones in the Middle East. Golgohar Mining and Industrial Company is the Iran’s largest producer of processed iron ore products such as concentrates, pellets and fine iron ore. Naser Taghizadeh, CEO of the company has mentioned that given the policies of Golgohar to prevent selling raw materials, this company is looking for developing iron ore processing capacities such as concentrate to 24 million tons, pellet to 21 million tons, sponge iron and steel each to 5 million tons by 2020 and Golgohar plans to attract local and foreign investors and develop the targeted markets.


History of Golgohar complex, existing plants and their capacities. 
Golgohar Mining and Industrial Company operates 6 separated Ore Bodies of Golgohar  which have remarkable ore reserves. The company is one of the most important and active mining and industrial poles in the Middle East. Golgohar Mining and Industrial Company has many capabilities to become a large and competitive company at national and international levels. After commissioning the prospective projects in the near future, the company’s annual processed iron ore products such as concentrate and pellet output capacity will reach to 16 million tons per year which will cover 30 percent of Iran’s steel makers’ needs. Currently, main products of Golgohar Mining and Industrial Company are fine iron ore, concentrate and pellet. By producing 10.8 million tons of iron ore concentrate and 157 thousand tons of fine iron ore, Golgohar Mining and Industrial Company covers 31 percent of Iranian iron ore market demand. Moreover by producing 5.3 million tons of iron ore pellets, the company has the highest market share.
Given the decline of global prices of commodities and mineral products and global economy slow down, Golgohar Company has put new policies on agenda such as increasing the production, Optimizing the cost management and increasing efficiency and productivity. All of these measures resulted in increase of production from 13.8 million tons to 16.2 million tons. On the other hand the company could set up No. 5 and No. 6 concentrate plants with 4 million tons output capacity, Gohar Zamin Company’s concentrate plant (subsidiary of Golgohar Mining and Industrial Company) and Jahan Foolad Sirjan’s 500 thousand ton steel rolling mill project. Moreover, equipment installation of No. 2 pelletizing plant with capacity of 5 million tons per year has been accomplished; beside these achievements, Golgohar Iron and Steel Development Company’s DRI plant with capacity of 1.7 million tons per year has been commissioned.

Technological improvements necessary for the existing mining and processing plants
Today, production of any high quality product requires its own especial technology. Process and process equipment of iron ore processing plants are designed based on quality and purity of the iron ore and every mine has its own special ore specifications. Golgohar Mining and Industrial Company must utilize latest processing technologies to defend its position in global market. Although the current process is based on the latest modern technology but in some mining and production sections, the utilized technology must be renewed and modified. In the mining; the reserves of Golgohar open pit deposits will come to an end soon. Therefore the method of iron ore extraction must be changed from open pit to underground mining to empower the company to exploit all reserves of Golgohar deposits. Generally underground mining technology has not been used in Iran yet. But it is necessary to be mentioned that iron ore underground mining is totally different from other mines such as coal underground mining. The amount of iron ore reserves and the level of extraction of ore in iron ore mines are much larger than the coal mines. Thus, it needs larger equipment and more advanced machineries which results in higher level of technologies; therefore very high amount of investment is required in underground iron ore mining.  
Recently one of our consultant companies and a reputed and experiences Canadian company have established a joint company which is supposed to review Golgohar processes in open pit mining; especially pit slope will be studied which is very sensitive and sometimes dangerous. Moreover one of the European companies has offered Golgohar to review the whole production process of Golgohar complex; this issue is on the table and negotiations are ongoing. In this study, the type of the system, efficiency, human resources and processing lines will be reviewed in order to remove potential problems in processing lines.

Projects in Golgohar mining complex
Some of the expansion projects have been invested directly by Golgohar Mining and Industrial Company and some others are invested through a partnership with other companies. Two concentrator plants with total capacity of 4 million tons per year (each processing plant has two million tons capacity) are in final steps of commissioning, the project started in late 2010. Moreover, beside these two plants, a crusher project with total capacity of 15 million tons per year and another concentrator plant with capacity of two million tons per year have been started. The other project is an iron ore pelletizing plant with total capacity of 5 million tons per year. These projects are being implemented directly by the company. 
The other project which Golgohar Mining and Industrial Company has entered a partnership are iron and steel making plants which is carried out by Golgohar Iron and Steel Development company. In the first phase, DRI plant with total capacity of 1.7 million tons per year sponge iron has been commissioned. Moreover, the second phase of the project with another mega module reduction shaft (1.7 million tons of sponge iron) has been started by the company. Constructing steel making plant and casing shop with total capacity of 1.5 million tons of thin slab per year has been also started.
Jahan Foolad Sirjan Company’s DRI plant with total output capacity of one million tons of sponge iron has been recently launched. The company’s steel making plant with total capacity of one million tons of steel billets has been started. Golgohar Mining and Industrial Company’s share in the company is 51 percent.
Two iron ore concentrator plants with total capacity of 4 million tons per year and a crusher plant with total capacity of 12 million tons per year is being carried out by Gohar Zamin Company.  This company’s pelletizing plant with total output capacity of 5 million tons is another project going on in Golgohar complex. 
In addition to aforementioned projects, Golgohar Mining and Industrial Company is shareholder of a company which is established to carry out water pipeline project to pump the desalinated water of Persian Gulf to central Iran. This project requires approximately EUR 1.25 billion budget. Iranian Management and Planning Organization (IMP) is supporting the project and Sepah Bank is financing the project. After rounds of negotiations with IMP, the organization expressed support for the project and allocated budget for it. In addition to these supports, Iranian National Development Fund (INDF) also allocated EUR 38 million as primary credit line for the project’s pipeline, INDF also allocated budget for procurement of two water desalination plants. The required roads have been built and stations, storage tanks and high pressure pumps have been specified.

Welcoming foreign investors
Currently given the fact that in mining pit extraction activities are running out widely, there isn’t any need to attract investment for mine exploitation but for processing projects, local and international investors are welcomed by Golgohar Mining and Industrial Company.
Currently we are negotiating with foreign counterparts to provide financial resources for our projects. For instance, a company has offered and investment in oxygen plant to provide required oxygen for steel making in Golgohar complex. Based on the offer, their share will be 80 percent and ours will 20 percent.

Mian target markets of Golgohar and Golgohar Strategies to increase market share
Traditionally and naturally China has always been considered as the most important partner of Iran’s iron ore products; currently there is surplus in domestic iron ore concentrate market so the concentrate is being exported to China. But it is necessary to mention that by commissioning No. 2 pelletizing plant the entire concentrate of the company will be used internally to produce pellets which will be sent to DRI plants. 
Diversification of products is an important strategy of the company to increase its market share. The company is looking for potential target markets including European countries and Turkey. 
While most of iron ore producers have set up direct railway from their mines to ports, currently transportation in Iran and Golgohar mining complex has become a real bottleneck. To overcome this problem and to increase sales and exports, the company has purchased 10 locomotives and 300 wagons. We have decided to establish a large railway transportation company to handle the company’s transportation services. In near future, transporting of minimum 10 million tons of company’s products to Bandar Abbas destination will be required.

Selling Products in international markets
We sell our products to international costumers by tendering. The main exporters and buyers of iron ore products are known in the global market; therefore in every tender, Golgohar sends tender invitation letters to 40 to 50 companies. After receiving and opening the tender documents, the product is sold out to the winner of the tender. I have to say that an iron ore export is very complicated and professional work.

Strategy of Golgohar for product branding
Golgohar has become an international brand during the recent year. The company could survive in the market regardless of the price fluctuations.  The Company could sell 2.6 million tons of its products (mostly concentrate) in international markets. Even though, the export quantity of the company is little in comparison to large global iron ore producers but the products instantly are being sold out because of high quality of the products. Last year, the offering price for the company’s concentrate was 7 to 8 dollars less than the price of Russian concentrate but today because of increased quality, the products are being offered with prices 3 to 4 dollars higher than Russian prices. But given the policy of the company not to sell raw material to complete the steel value chain, we decided to sell only 980 thousand tons of the products in international market. Moreover, currently DRI is and in the future steel will the new products of company which branding is necessary for them. Products like sponge iron create more value-added even more than steel and steel products. So branding the company’s sponge iron is a must.