* Iran imported 30,000 T of alumina from China over June,
* India's NALCO awards alumina tender to Iran producer
* Shipments are smelter grade, not chemical grade - traders
* Unlikely to have military or nuclear applications
By Polly Yam and Jatindra Dash
HONG KONG/BHUBANESWAR, India, Aug 27 Iran has
hiked purchases of alumina from China and India in the past two
months as the country scrambles to shore up supply after the
U.S. tightened sanctions on raw and semi-processed materials at
the start of July.
Western measures targeting Iran's disputed nuclear programme
have hit many sectors of its economy including industries
producing steel and other metals, where it is heavily dependent
on imports. Tehran says its atomic work is peaceful.
Tightened U.S. sanctions came into effect on July 1 that
extended a ban on aluminium metal to cover raw and semi-finished
metals as well. China and India have won waivers from any U.S.
sanctions on their financial system related to trade with Iran
because they have cut imports of Iranian oil.
China's alumina exports to Iran jumped to record levels in
June and July, customs data shows, while India's national
aluminium producer has awarded an alumina tender to Iran's
national smelter in the past two months, company sources say.
"Iran has historically had a decent-sized aluminium
industry. Given the savage squeeze in the international
sanctions against it, clearly it's easier for Iran to do these
kind of transactions with countries like China," said Nic Brown,
an commodities analyst at Natixis in London.
"Particularly if they are handled as some sort of barter
arrangement, where China gets its energy and in return it
provides raw or intermediate goods," he added.
Alumina is a refined version of the raw ore bauxite. It is
typically used to make aluminium, but in its high purity form it
can have sensitive military applications.
But the price of the material would indicate that Iran's
imports from China and India are likely to have been of lower
quality smelter grade alumina rather than the high-purity
material known as chemical grade, traders said.
Chemical grade alumina can have military uses, such as to
make ceramic composites used in missiles and armour.
The prices Iran paid for the material from India and China
were less than a quarter of that for chemical grade material.
Aluminium alloys can be used to make tubes for uranium
enrichment gas centrifuges. Most newer gas centrifuges are made
of a carbon composite material, though Iran's current centrifuge
programme in operation is based on aluminium. Aluminium is also
used in everything from cars to aircraft, buildings and cans.
China, the world's top producer and consumer of alumina,
exported 15,072 tonnes to Iran in July and 15,078 tonnes in
June, customs data showed.
That compared with sales to Iran of 553 tonnes for the whole
of last year, out of China's total 2012 alumina exports of
43,293 tonnes, customs data shows.
It is unclear from official customs data which companies
have been selling to Iran and where the alumina was produced.
Sources in international and Chinese trading houses said the
alumina recently shipped to Iran probably came from China's
bonded warehouses, where the alumina has not paid China's 17
percent value-added tax, which means the metal was most likely
produced outside of China.
Iran has been paying a premium to domestic Chinese prices,
making the metal attractive to re-export rather than import into
China, traders said.
In India, the National Aluminium Co Ltd (NALCO)
has awarded a sell tender to the Iran Aluminium Company
(Iralco), two sources said.
The European Union sanctioned Iralco in December 2012 for
supplying aluminium to The Iran Centrifuge Technology Co (TESA),
which is a subsidiary of the Atomic Energy Organization of Iran
Swiss trading giants Trafigura and Glencore Xstrata
have both supplied alumina to Iralco in the past as part of
barter deals in exchange for aluminium, but both halted supplies
over new EU sanctions.
NALCO company officials, including Chairman and MD Ansuman
Das declined to comment on the tender award.
Iralco could not immediately be reached for comment.
IRAN TRADE TIES
A senior official at India's mines ministry, under which
state-owned NALCO operates, said the government was not looking
into the issue but could investigate if required.
"In general, we do not have anything against trade ties with
Iran," the official said.
The sale was for 30,000 tonnes of alumina to Iralco and
shipments were due to start in August, the sources said.
The deal comes as India tries to boost exports to Iran to
balance a trade deficit with the country due to India's oil
imports. India is seeking to boost overall exports worldwide to
shore up its currency, which has sunk to record lows.
"(The) Indian government is encouraging exports to Iran.
There is nothing wrong in NALCO exporting alumina to that
country," a senior company official who declined to be
identified due to corporate policy told Reuters.
NALCO said last week it planned to raise its alumina
exports by 40 percent to 1.4 million tonnes this fiscal year to
help India increase dollar inflows as global investors dump
emerging market currencies anticipating the gradual end to U.S.