Chinese Government pledges loan for Butia Pelletizing and Steel Making Project

On January 13, 2013, China Nonferrous Metal Industry's Foreign Engineering & Construction (中国有色金属建设股份有限公司) and Butia Iranian Steel Company (BISCO or 伊朗布提亚钢铁公司) signed an EUR 535,500,000 ($712 million0 EPC contract for the Butia Pelletizing and Steel Making Project. BISCO expected to finance approximately 85% of the cost of the EPC contract with a buyer’s credit loan from a Chinese bank and a credit insurance policy from Sinosure. The purpose of the project was to construct a steel manufacturing plant in Chatroud, Kerman Province (locational coordinates: 30.602249, 56.911473). Upon completion, it was envisaged that the plant with have the capacity to produce two million tonnes per annum (MTPA) of sponge iron unit and 1.5MTPA of steel billets. The project was also expected to involve the installation of production unit, processing units, a raw material storage facility, a warehouse and an administrative facility, and relevant machinery.

Additional details

1. AidData assumes for the time being that the face value of the loan was equivalent to 85% of the total value of the EPC contract (EUR 455,175,000). 2. The specific financier of this project is unknown. However, around the time that the project was financed, China reportedly owed Iran over $20 billion in oil payments. This funding was frozen in overseas banks after US-led sanctions made it difficult for Beijing to transfer money to Tehran. Iran and China reportedly reached a deal to settle some parts of the frozen money through China’s funding of Iranian petrochemical projects. Also, in 2017, a Vice President of China Eximbank reported that it had financed 26 electricity, petrochemical, oil and gas and nonferrous metal projects in Iran worth $9 billion. Therefore, China Eximbank is the most likely funder of this project. 3. The Persian project title is شرکت فولاد بوتیای ایرانیان

Number of official sources

1

Number of total sources

1