Iran a force in cement industry

Iran is cementing its control over the Middle East and broader continent. Literally. A production capacity of 70 million tons of cement per year makes Iran the fourth largest manufacturer in the world and the largest in the Middle East. With the fastest cement industry growth rate on the planet, Iran will soon surpass the United States, currently the third largest producer.

The economic forces of supply and demand cannot fully explain Iran’s dominant position in the cement industry. It just so happens that the country is funding an insurgency in the world’s top cement importer, Iraq. For over a decade, the Quds Force, a special unit of the Iranian Revolutionary Guard, has trained and equipped Iraqi-Shia militias.

{mosads}Iran is simultaneously contributing to Iraq’s destruction and its (re)construction. According to an official at the Iran-Iraq Joint Chamber, Iran currently supplies about half of Iraq’s total cement consumption. The underlying message that Iran is sending through its cement industry is ‘what war destroys, we rebuild.’ 

It has tried to send this message in the Gaza Strip, too. Gaza’s dire construction needs (a shortage of 75,000 housing units before this past summer’s war) has made it a prime target for Iranian cement. In March 2014, Israeli naval commandos intercepted a Panamanian-flagged ship, likely Sinai-bound, carrying 100 containers of Iranian cement. Twenty of these containers also concealed various forms of ammunition, including surface-to-surface rockets. The containers originated from the southern Iranian port of Bandar Abbas.

Cement is both a lucrative economic and political opportunity for Iran. Parts of its cement industry are possibly government fronts masquerading as private companies. The Social Security Fund, an Iranian government institution, happens to be the main shareholder in Fars & Khuzestan Cement Company (FKCC), the country’s largest cement producer. In 2008, the British government listed a subsidiary of FKCC as an entity of potential concern for WMD-related procurement.

The Iranian cement industry’s political agenda predates the “Arab Spring.” In 2000, Iranian Minister of Industry, Gholam Redha Shafeay, announced plans to build a $200 million cement factory in Syria. Today, as the emerging third largest producer of cement, Iran is in a strong position to help President Bashar al-Assad rebuild Syria – a country where well over one-third of all homes have been destroyed.

Iran may also be cementing its influence over Syria from neighboring Lebanon. Last year, the pan-Arab Asharq al-Awsat newspaper reported that Hezbollah founded a new cement company in Lebanon with Iranian financing. This harkens back to Iran’s involvement in the reconstruction of Iraq after the 2003 U.S.-led invasion and of Lebanon after the 2006 Israel-Hezbollah war. Iran’s cement exports to Lebanon went from zero the year of the war to 13 million tons in 2013.

Iran exports cement to around 24 countries. The main importers of its cement are Iraq (63 percent), Turkmenistan (7 percent), and Azerbaijan (4 percent). Lately, Afghanistan has also become a larger purchaser. And this has Pakistani manufacturers worried. 

Aizaz Mansoor Sheikh, chairman of the All Pakistan Cement Manufacturers Association, blames U.S. sanctions for surplus Iranian capacity. The availability of cheaper Iranian cement threatens Pakistani manufacturers in Iraq and Afghanistan. Iranian cement is reaching Balochistan, a province in Pakistan’s southwest, through informal channels and is priced lower than locally-produced cement. Pakistani exports to Afghanistan have since declined by 10 percent.

Iran’s agenda may go beyond pricing Pakistani manufacturers out of the market. Balochistan, Iran’s target market, is home to around 650,000 Hazara. This Shia Muslim group has ties to 1 million Iranian Hazara, who have increasing reason to worry about their Pakistani brethren. Sunni militant group attacks against the Hazara in Balochistan have steadily risen. Since 2013, targeted violence has claimed the lives of hundreds of Hazara. Two of the most deadly bombings, which took place in January and February 2013, left at least 180 dead in the provincial capital of Quetta.

The cement industry is one example of how Iran’s dealings in global markets are not only economically, but also politically, motivated. The country’s cement industry thrives in Iraq, a country with a destabilizing Shia insurgency and the world’s number one cement importer. Cement also provides Iran a foothold for military support to Assad in Syria and Hamas in Gaza. 

Iran is cementing its position in its neighborhood’s political and economic landscape, and Western sanctions have not been able to stop it.

Heffez is a Middle East expert, formerly at the Washington Institute and currently at Stanford Graduate School of Business.