Concentrate Purchases Rise from 70,000 to 750,000 Tonnes

Expanding the supplier network, purchasing more than ten times as much iron ore concentrate, and entering new sourcing markets are among the measures Sangan steel company has adopted to overcome constraints in mining operations and raw-material procurement.

Hossein Ensan, Head of Raw Materials and Energy Procurement at Sangan steel, said that before the recent changes, the plant’s feedstock supply was heavily dependent on iron ore received from the state-owned mine. Almost all of the company’s requirements for iron ore and the concentrate produced from it were met through this channel, leaving limited need for purchases from external sources. However, this year’s conditions and disruptions to mining operations prompted the company to reconsider its procurement model.

Ensan explained that a shortage of explosives in the region and the resulting difficulties in extraction made it necessary to change sourcing routes. The company therefore turned to sized iron ore from deposits outside the state-owned mine’s supply area—resources that could be recovered without blasting. At the same time, securing concentrate for the pelletizing plant became a higher priority because the company’s own concentration plant was operating at a substantially lower level and could not meet the complex’s requirements.

The figures illustrate the scale of the change. According to Ensan, externally purchased concentrate amounted to less than 70,000 tonnes in the first six months of 1404, but reached approximately 750,000 tonnes in the corresponding period of the current year—more than ten times the previous figure. He also reported a broader range of sources for non-lump iron ore, with procurement from outside the state-owned mine expanding significantly compared with the previous year.

The new sourcing strategy has involved more than increasing purchase volumes; it has also expanded the supplier network. In addition to maintaining cooperation with major regional producers, including Ehya Sepahan and Foolad Shargh Kavir, whose proximity offers lower transport costs, Sangan steel company has identified new sources. Under a programme launched this year to identify smaller-scale suppliers, more than 15 companies were identified, and the company began working with approximately 10 to 12 of them.

According to Ensan, these new suppliers account for a substantial share of purchase orders by number, while long-standing suppliers have also recorded significant increases in sales to Sangan steel. The company has also widened its geographical sourcing area beyond the Sangan mining district. Purchases have been pursued in different parts of Khorasan, including Khosf, despite its considerable distance from Sangan, as well as Bardaskan, Qaen, and Hajjiabad-e Qaen. Negotiations have also been held with suppliers in Yazd and Semnan. Although these discussions have not yet resulted in finalized cooperation, the company remains open to such arrangements where they are economically justified.

Ensan also highlighted the role of support functions in implementing the policy. Financial support helped address payment and funding challenges, while the use of company-owned trucks under the Commercial Deputy’s logistics unit reduced transport costs and generated economic benefits. Together, improved financial arrangements and in-house logistics have enabled Sangan steel company to broaden its sourcing radius and expand procurement activities.