A New Industrial Chapter for Central Asia

In a significant move that underscores growing regional cooperation in metallurgy and technology transfer, Iran has entered a major engineering services agreement with a Chinese firm for the construction of a sponge iron plant in Kazakhstan. The project, which carries an annual production target of 800,000 metric tons, was formalised in a ceremony attended by both Iranian and Chinese representatives. This collaboration not only strengthens Tehran's economic outreach but also illustrates the strategic utilisation of indigenous Iranian innovation through its PERED direct reduction process.

The Role of PERED Technology

At the heart of this venture lies Iran’s PERED, Persian Reduction, technology, a homegrown process for producing sponge iron through the reduction of iron ore using natural gas. Taherzadeh, Head of ASCOTEC Holding, the engineering and export arm of Iran's steel sector, highlighted the milestone nature of the deal, calling it the first regional export of PERED-based engineering services. Unlike traditional methods, the PERED process offers enhanced energy efficiency, reduced CO₂ emissions, and lower operational costs. This initiative positions Iran not only as a steel producer but as a tech exporter within the regional industrial supply chain.

Chinese Partnership with Global Ambitions

The deal was signed with China's TCS company, known for its long-standing business relations with Iran. Mr. Sun, a representative from TCS, praised the nearly two decades of bilateral cooperation in the steel industry. He expressed confidence in the scalability of this partnership, saying, “We have strong investment capabilities in Iran’s steel sector and are confident this success can be replicated in Kazakhstan.” He also noted their active participation in Africa, indicating that the Kazakh project may be a precursor to expanded tri-continental industrial alliances.

Kazakhstan: A Strategic Choice

Kazakhstan, rich in iron ore reserves and centrally located in Eurasia, represents a strategic foothold for this trilateral cooperation. The new plant is expected to boost domestic steel production, reduce reliance on imported sponge iron, and generate employment across technical and managerial levels. Moreover, the project's location aligns with China's Belt and Road Initiative, offering logistical ease for exporting finished goods to China, Russia, and European markets. The integration of Iranian engineering and Chinese financing could become a prototype for future industrial ventures in the region.

Engineering Diplomacy in Action

The event also highlighted Iran's pivot toward engineering diplomacy. Vajihollah Jafari, Deputy Minister for Mining Affairs in Iran’s Ministry of Industry, Mining and Trade, hailed the contract as a “milestone in Iran-China cooperation in third countries.” He expressed hope that similar collaborations would soon expand into other sectors such as cement, aluminum, and petrochemicals. By exporting its intellectual and engineering capital, Iran is redefining its economic diplomacy through technology, rather than merely exporting raw materials or finished goods.

Long-Term Strategic Goals

For Iran, this move is more than a commercial contract; it is a demonstration of the viability and competitiveness of its domestic R&D. The PERED technology was developed in response to years of sanctions and limited access to foreign expertise. Now, with external demand validating its performance, the technology serves as a diplomatic and industrial lever. Iran's strategic vision includes becoming a regional hub for steel and mining technology exports, and this Kazakhstan project may be the first of many.

Economic Implications for All Three Nations

From an economic perspective, the deal brings mutual benefits. For Iran, it secures foreign currency inflows and builds international credibility for its engineering firms. For China, it solidifies its industrial presence in Kazakhstan, a country with deep ties to both Beijing and Moscow. For Kazakhstan, the plant promises technology transfer, job creation, and increased industrial self-sufficiency. The 800,000 metric tons per year capacity is substantial for Central Asia and is expected to catalyse ancillary industries including construction, transport, and equipment supply.

A Template for Future Ventures

The successful execution of this project could pave the way for broader engineering exports from Iran and deeper strategic entente between Tehran, Beijing, and regional allies. As sanctions evolve and global supply chains shift, such partnerships demonstrate alternative pathways for industrial development rooted in regional self-reliance. If replicated, this model could redefine how countries with indigenous technology like Iran assert influence through peaceful, productive, and profitable engineering.

Key Takeaways

• Iran’s ASCOTEC Holding signed a deal with China’s TCS to export PERED-based engineering services for a sponge iron plant in Kazakhstan with 800,000 metric tons annual capacity.

• The project reflects Iran’s shift from raw material exports to engineering and technology diplomacy using its homegrown PERED process.

• All three nations, Kazakhstan, Iran, and China, stand to gain through economic cooperation, technology transfer, and regional industrial synergy.