ESCO to Inaugurate Rail Production Line

Esfahan Steel Company is scheduled to officially launch its rail production line.

On Tuesday, ESCO signed a contract with the Islamic Republic of Iran Railways to produce 40,000 tons of U33 rails, 10,000 of which are to be delivered by the end of the current Iranian year (March 2017).

The U33 rails will support a speed of up to 160 kilometers per hour.

ESCO says production of UIC66 rails, which are used for high-speed train, is also among its future plans.

The ministries of industries and roads, as well as ECSO, teamed up two years ago to develop the so-called “National Rail Project” to reduce reliance on imported rails.

The project, however, was delayed due to recession in the domestic steel market, ESCO’s lack of liquidity and IRIR’s refusal to pre-purchase the steel rails.

Initial plans to produce domestic rails go back 10 years when the former government thwarted a deal to import 100,000 tons of rails from Spain, arguing that imports should be curbed so that demand is met via domestic manufacturers.

The Isfahan-based company is betting on the launch of the project as it seeks to increase its capital in Tehran Stock Exchange by 322% times to around $925 million through revaluation of assets.

The domestic production plans come, as Turkey, India and China are jockeying to increase their share in the Iranian rail market.

Turkish steel producer Kardemir recently shipped 10,000 tons of rails to Iran as part of an €80-million contract to export 140,000 tons of rail. The company says it has already produced 40,000 tons of rails as per the contract.

Back in August, New Delhi-based steel and energy company, Jindal Steel and Power Limited, shipped the first consignment of 1,700 tons of rails out of a total order for 150,000 tons to Iran.

China has exported 40,000 tons of rails to Iran during the first six months of the current Iranian year (started March 20), according to the Islamic Republic of Iran Customs Administration.

Minister of Roads and Urban Development Abbas Akhoundi said by 2021, Iran needs to build 1,500 kilometers of railroads, for which it needs 1.8 million tons of rails.

Iran’s sixth five-year economic development plan (2016-21) stresses, among other things, the need to develop the rail transport network.

The Islamic Republic of Iran Railways says Iran needs an average of 300,000-400,000 tons of rails per year to meet the needs of this key transport sector.

The 20-Year Vision Plan (2005-25) stipulates that the number of passengers using rail transport will increase from the current 25 million to 65 million per year.

source: Financial Tribune