January 9, 2008 -- Amid reports that it has put its three million tonne greenfield project in Iran on hold, Tata Steel (BSE:500470) said that it was working on "some issues" pertaining to it.

The reports attributed the decision to put the project on hold to political uncertainty and larger geopolitical concerns. Earlier, Essar Group had dropped plans to develop an oil refinery in the Persian Gulf nation.

" Tata Steel has put its 3 million tonne per year greenfield steel project in Iran on hold because of political uncertainty. The decision has been made for reasons not related to business, but to larger geopolitical concerns," the Metal Bulletin (MB) reported quoting a Tata Steel official.

It quoted Iranian industry sources as saying that activities on the Iran project have been at a complete standstill for two months.

When contacted, a Tata Steel spokesperson said: "The process is on. There are some issues which are being worked out."

After Essar, Tata Steel has become the second company to put investment plans on hold in Iran, which is facing US sanctions.

Tata Steel had signed a Memorandum of Understanding (MoU) last year with the Persian Gulf Special Economic Zone for land and other infrastructural facilities in the SEZ at Bandar Abbas, Metal Bulletin said.

Under the MoU, Tata had agreed to set up a Direct Reduced Iron based steel plant with 3 million tonne capacity per annum which could be scaled up to 5 million tonnes.

"The Iranian project was to be 100 per cent owned by Tata Steel subsidiary, while the entire production from the unit was to be made available for export," MB added.

Source: Asia Pulse