On January 5, the U.S. Treasury sanctioned 12 Iranian and four foreign-based companies as well as one Iranian man involved with steel production and sales. Concurrently, the State Department sanctioned an Iran-based shipping company involved in supplying graphite, a key element in steel production, to Iran. Steel and other metals have historically accounted for some 10 percent of export revenue, the biggest source of revenue after oil.
“The Trump Administration remains committed to denying revenue flowing to the Iranian regime as it continues to sponsor terrorist groups, support oppressive regimes, and seek weapons of mass destruction,” Treasury Secretary Steven Mnuchin said. The action was taken pursuant to Executive Order 13871, issued in May 2019, which prohibited transactions related to Iran’s aluminum, copper, iron and steel sectors. The following are statements from the Treasury Department and Secretary of State Mike Pompeo on the new designations.
U.S. Treasury Statement
Today, the U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) designated a China-based supplier of graphite electrodes, a key element in steel production, as well as twelve Iranian producers of steel and other metals products, and three foreign-based sales agents of a major Iranian metals and mining holding company. The Iranian metals sector is an important revenue source for the Iranian regime, generating wealth for its corrupt leaders and financing a range of nefarious activities, including the proliferation of weapons of mass destruction and their means of delivery, support for foreign terrorist groups, and a variety of human rights abuses, at home and abroad.
“The Trump Administration remains committed to denying revenue flowing to the Iranian regime as it continues to sponsor terrorist groups, support oppressive regimes, and seek weapons of mass destruction,” said Secretary Steven T. Mnuchin.
Today’s action was taken pursuant to Executive Order (E.O.) 13871, which imposes sanctions on several sectors of the Iranian economy, including Iran’s steel sector, that continue to generate significant revenue for the Iranian regime.
Chinese Supplier of Materials Critical to Iranian Steel Production
Chinese company Kaifeng Pingmei New Carbon Materials Technology Co., Ltd. (KFCC) specializes in the manufacture of carbon materials, key elements in steel production. Between December 2019 and June 2020, KFCC fulfilled orders totaling thousands of metric tons of materials for several Iranian steel companies. In mid-2020, KFCC, working with an Iranian trading firm, sold 300 metric tons of graphite electrodes and miscellaneous equipment to Pasargad Steel Complex in Iran.
KFCC is being designated pursuant to E.O. 13871 for having materially assisted, sponsored, or provided financial, material, or technological support for, or goods or services in support of, Iranian steelmaker Pasargad Steel Complex, an entity designated pursuant to E.O. 13871 for operating in the steel sector of Iran.
Iranian Steel Companies and Foreign-based Sales Agents
OFAC is designating 12 Iranian steel manufacturers or holding companies, whose combined annual output capacity reaches millions of metric tons of steel product.
The Pasargad Steel Complex is an Iranian steel manufacturer, operating a complex capable of producing 1.5 million tons of steel billets per year. The Gilan Steel Complex Company maintains a hot rolling mill with a 2.5-million-ton capacity and a cold rolling mill with an annual capacity of 500,000 tons. Both entities are being designated pursuant to E.O. 13871 for operating in the steel sector of Iran.
Iran-based Middle East Mines and Mineral Industries Development Holding Company (MIDHCO), a metals and mining holding company that includes steelmakers Sirjan Iranian Steel and Zarand Iranian Steel Company, has a collective production capacity of over 19 million tons of steel, iron, and copper products. MIDHCO encompasses seventeen subsidiaries, including fully owned companies in Germany, China, and the United Kingdom. MIDHCO’s Germany-based subsidiary GMI Projects Hamburg GmbH paid foreign companies for procurement of parts and machinery on behalf of Sirjan Iranian Steel and Zarand Iranian Steel Company. MIDHCO’s China-based subsidiary World Mining Industry Co., Ltd. seeks to develop business relationships with Chinese suppliers in the industry.
MIDHCO is being designated for owning, controlling, or operating Sirjan Iranian Steel and Zarand Iranian Steel Company, entities that are part of the steel sector of Iran.
GMI Projects Hamburg GmbH, World Mining Industry Co., Ltd., and U.K.-based GMI Projects Ltd. are being designated for being owned or controlled by MIDHCO.
OFAC is also designating Iranian steelmakers Khazar Steel Co., Vian Steel Complex, South Rouhina Steel Complex, Yazd Industrial Constructional Steel Rolling Mill, West Alborz Steel Complex, Esfarayen Industrial Complex, Bonab Steel Industry Complex, Sirjan Iranian Steel, and Zarand Iranian Steel Company pursuant to E.O. 13871 for operating in the steel sector of Iran.
Concurrent with this action, the State Department is sanctioning KFCC and the Islamic Republic of Iran Shipping Lines (IRISL) subsidiary Hafez Darya Arya Shipping Company pursuant to Section 1245(a)(1)(C)(II) of the Iran Freedom and Counter-Proliferation Act of 2012 (IFCA) for having knowingly sold, supplied, or transferred, directly or indirectly, graphite to or from Iran, and such graphite was sold, supplied, or transferred to or from an Iranian person on the SDN List. The State Department is also sanctioning Majid Sajdeh, a principal executive officer of Hafez Darya Arya Shipping Company, pursuant to IFCA Section 1245(a)(1)(C)(II).
Sanctions Implications
All property and interests in property of these persons that are in the United States or in the possession or control of U.S. persons must be blocked and reported to OFAC. OFAC’s regulations generally prohibit all dealings by U.S. persons or within (or transiting) the United States that involve any property or interests in property of blocked or designated persons.
In addition, persons that engage in certain transactions with the persons designated today by OFAC may themselves be exposed to sanctions. Furthermore, any foreign financial institution that knowingly conducts or facilitates a significant transaction for or on behalf of the persons designated by OFAC today could be subject to U.S. correspondent or payable-through account sanctions.
Secretary of State Mike Pompeo
“Today, the United States is imposing sanctions on 17 companies and one individual in connection with Iran’s metals industry. The Iranian regime uses revenue from its metals sector to fund the regime’s destabilizing activities around the world.
“The Department of State is designating China-based Kaifeng Pingmei New Carbon Materials Technology Co., LTD (KFCC) and Iran-based Hafez Darya Arya Shipping Company (HDASCO), a subsidiary of the “Islamic Republic of Iran Shipping Lines (IRISL), pursuant to Section 1245(a)(1)(C)(i)(II) of the Iran Freedom and Counter-Proliferation Act of 2012 (IFCA). Both companies knowingly sold, supplied, or transferred, directly or indirectly, graphite to or from Iran and such graphite was sold, supplied, or transferred to or from an Iranian person (South Kaveh Steel Company and Arfa Iron and Steel Company) included on the Department of Treasury’s Specially Designated Nationals List. The State Department is also imposing sanctions on Majid Sajdeh, who is a principal executive officer of HDASCO.
“The Department of the Treasury further designated 16 companies that are active in Iran’s metal industry, pursuant to Executive Order (E.O.) 13871. Iran-based Pasargad Steel Complex, and Vian Steel Complex, Gilan Steel Complex Company, Khazar Steel Co., South Rouhina Steel Complex, Yazd Industrial Constructional Steel Rolling Mill, West Alborz Steel Complex, Esfarayen Industrial Complex, Bonab Steel Industry Complex, Sirjan Iranian Steel, Zarand Iranian Steel Company, and Middle East Mines and Mineral Industries Development Holding Company were designated pursuant to Section 1(a)(i) of E.O. 13871 for operating in the steel sector of Iran, or for owning or controlling companies that operate in the steel sector of Iran.
“Additionally, Germany-based GMI Projects Hamburg GmbH, UK-based GMI Projects Ltd., and China-based World Mining Industry Co., Ltd. were designated pursuant to Section 1(a)(v) of E.O. 13871 for being owned or controlled by Middle East Mines and Mineral Industries Development Holding Company. Treasury is also concurrently designating KFCC pursuant to Section 1(a)(iv) of E.O. 13871 for having materially assisted, sponsored, or provided financial, material, or technological support for, or goods or services in support of, Pasargad Steel Complex, a person whose property and interests in property are blocked pursuant to E.O. 13871.
“The United States will continue to aggressively implement sanctions with respect to the Iranian regime, those who evade sanctions, and others who enable the regime to fund and carry out its malign agenda of repression and terror.”