US Department of the Treasury’s Office of Foreign Assets Control 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. This action was taken pursuant to Executive Order 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. Secretary Steven T Mnuchin said “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.”
Chinese company Kaifeng Pingmei New Carbon Materials Technology Co Ltd specializes in the manufacture of carbon materials, key elements in steel production. Between December 2019 and June 2020, KFCC fulfilled orders totalling 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.
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.
Iran-based Middle East Mines and Mineral Industries Development Holding Company, 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 UK 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 subsidiary Hafez Darya Arya Shipping Company 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
Sanctions Implications - All property and interests in property of these persons that are in the United States or in the possession or control of US persons must be blocked and reported to OFAC. OFAC’s regulations generally prohibit all dealings by US 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 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 US correspondent or payable-through account sanctions.