Chinese Firms Help to Update Tehran Subway

(Beijing) — Chinese state-owned train makers announced two separate deals to supply subway cars to Iran, which is trying to bolster one of the largest urban rail systems in the Middle East.

The military-affiliated Norinco International disclosed a 93 million euro ($100 million) contract to manufacture 70 subway cars for the Tehran Metro, according to a statement released to the Shenzhen Stock Exchange on Monday

Cars will be sold to Tehran Wagon Manufacturing Co., a joint venture formed between Norinco, with a 29% stake, together with Tehran’s official subway operator, and a division of China’s top train manufacturer CRRC Corp. Ltd.

Norinco’s parent is a military-owned trade company that develops and exports defense equipment and technology, and has been helping Iran to build a mass transit system for years under a previous arrangement, according to earlier reports.

In 2015, the joint venture inked a 9 billion yuan ($1.3 billion) deal to supply about 1,000 subway cars for the Tehran Metro. The joint venture also holds a contract to construct the Tehran Metro Line Six, which is expected to be completed this year, for $1.2 billion.

In a separate deal, also in Tehran, the Nanjing Puzhen branch of CRRC said it has updated an agreement with an Iranian train operator, stating that 200 remaining subway cars in an order for 315 will be produced locally, in Iran, instead of China, according to an announcement on Monday.

“This will enhance Iran’s industrialization level and create job opportunities,” said Hossein-Rajab Salahi, director of Iran’s railway transportation office.

China has spent trillions of yuan over the last decade building up state-of-the-art subway and high-speed rail systems throughout the country, providing greater mobility within and between cities as part of its transition from a planned to a free-market economy. Following that buildup, companies like Norinco and CRRC have been energetically marketing their rail expertise across the globe as part of a Beijing policy that encourages exports of homegrown technology.

Earlier this month, CRRC began construction on a rail car factory in Chicago, a year after securing a $1.3 billion contract to supply cars to the Chicago Transit Authority. That followed another international deal in January, when CRRC won a $277 million order from Boston’s subway operator.

Contact reporter April Ma (fangjingma@caixin.com)