SEOUL/NEW DELHI: From steelmakers to construction firms, industrial companies in Asia hope an end to sanctions in Iran can provide a new source of sorely-needed demand.
South Korean steelmaker Posoco has been in touch with Iranian firms seeking to do business with it once sanctions are lifted, and Indian industrial conglomerate Larsen & Toubro is eyeing opportunities in oil and gas extraction projects following Tuesday’s nuclear deal.
Lifting sanctions could keep a check on oil prices, to the benefit of big Asian energy importers China, Japan, India and South Korea, while a stronger Iranian economy, with a population of some 80m, would provide a new engine of demand for Asian-made goods — from smartphones and TVs to cars.
For South Korean builders such as GS Engineering & Construction Corp, a deal would give a lift for a sector buffeted by sluggish demand in the Middle East, the industry’s biggest market.
Shares in GS E&C, which walked away from a $1.2bn project in Iran five years ago as sanctions escalated, gained nearly five percent yesterday, and South Korea’s construction index ended nearly three percent higher on hopes the Iran deal will generate new business.
“When the Iranian nuclear agreement is reached and sanctions are lifted, we plan to actively re-enter Iran’s construction market,” said Huh Tai-youll, a GS E&C spokesman.
Even though companies such as Samsung Electronics and LG Electronics have continued to sell products in Iran, South Korean exports to the country fell to $4.16bn last year from $6.26bn in 2012, according to the Korea International Trade Association.
Kwon Oh-joon, CEO of Posco, which has been battered by sluggish global demand, said Iran was once a significant market for its steel products. “A few steel companies in Iran already contacted us if we can provide steel production technology,” he said after the company reported quarterly results on Wednesday. “We are looking for ways to improve POSCO’s financial structure while playing a role in reviving the Iranian steel industry.”
India’s Tata Power and Adani Enterprises , respectively eyeing a power project and a port project, sent officials to Iran last month to meet with industrialists and officials, said a senior Indian embassy official in Tehran. Adani declined comment and Tata Power did not respond to requests for comment.
Shares in India’s Aban Offshore, which earns a third of its revenue from Iran, jumped more than 16 percent on Tuesday and another two percent yesterday, while National Aluminium Co gained two percent yesterday after media reports said it planned a $3bn smelter complex in Iran.
Reuters
