* Iran aims to quadruple production by 2025
* Demand growing by 10 percent a year inside Iran
* Western sanctions have driven up industry costs
By Emma Farge
GENEVA, Sept 20 (Reuters) - Iran plans to invest around 8.5
billion euros ($11.4 billion) in its aluminium industry as part
of plans to nearly quadruple production by 2025, an official at
mining group Imidro said on Thursday.
Iran is the 20th largest producer of aluminium in the world,
according to the Iranian Mines and Mining Industries Development
and Renovation Organisation (Imidro), and needs the extra
supplies to meet demand which is growing by 10 percent a year.
Aluminium is a lightweight metal used widely in transport,
packaging and construction. It can also be used to make tubes
for uranium enrichment gas centrifuges.
Iran's economy has been hobbled by western sanctions aimed
at pressuring Tehran to stop efforts to enrich uranium to levels
that could be used in weapons.
Iran produced 338,000 tonnes of aluminium last year and is
aiming for 770,000 tonnes in 2016 and 1.5 million tonnes by
2025, Panthea Geramishoar, senior expert in Imidro's non-ferrous
department said at a Metal Bulletin conference in Geneva.
Geramishoar did not give a timeframe for the eight projects
involved in the programme, but added that bidding was underway
for one plant(Persian Gulf Alumina) and financing was being
arranged for two others(Salco, Kalco).
Iran could struggle to increase production so quickly given
it is heavily dependent on importing the raw ore bauxite or the
refined ore alumina at a high cost. Alumina costs have been
pushed up by the impact of sanctions.
According to Press TV, an Iranian news site, Iran's
aluminium output hit 119,560 tonnes in the first four months of
the current Iranian calendar year, which began on March 21.
At this rate, the country would produce 358,680 tonnes for
2013, just 6 percent above last year's output level.
Geramishoar said higher prices for alumina imports have
already contributed to a rise in the cost of aluminium
production to over $2,000 a tonne.
LME aluminium was trading at $1,827.75 per tonne at
"The current conditions are obviously not favourable...as
the raw material we buy is mostly on a barter basis. In more
optimum conditions, the costs could be decreased to around
$1,700 a tonne or even less," she said, adding that sanctions
were one of the factors driving up raw material costs.
The United States tightened sanctions on raw and
semi-processed materials, such as alumina, to Iran at the start
of July this year as part of a campaign to target Iran's nuclear
programme. Tehran says that its atomic work is peaceful.
Western sanctions cut Iran's petroleum revenue by about $26
billion in 2012 from a total of $95 billion in 2011. Iran also
had to contend with soaring inflation, and a devaluation of its
currency, the rial.
Iran has increased purchases of alumina from China and India
in the past two months to help replace former contracts impacted
by sanctions. [ID: nL6N0GR0WB]
The Iran Aluminium Company (Iralco), which western sources
believe has links to the Iran Centrifuge Technology Company
(TESA), was recently awarded a tender to buy alumina from
India's National Aluminium Company (Nalco). [ID: nL6N0GR0WB]
The United States can dissuade countries from trading in
sanctioned goods with Iran by threatening to cut their banks off
from the U.S. financial system. It can also blacklist any
company, local or foreign, that deals in sanctioned goods with
(Additional reporting by Maytaal Angel in London; editing by