BEIJING, March 21 Hebei Steel Group, China's
biggest steelmaker by output, has won approval for a 42.4
billion yuan ($6.2 billion) project that will reduce its steel
capacity by nearly 2 million tonnes and upgrade old technology,
Hebei province's economic planner said.
China, the world's biggest producer and consumer of steel,
is prioritising supply-side reform in its steel and coal
sectors, seeking to tackle pollution and cut an output capacity
glut that has weighed on both domestic and global prices.
The Development and Reform Commission (DRC) of Hebei,
China's largest steelmaking province, approved the project for
four units of the Hebei Steel Group in a March 16 document that
was published by China Steel News on March 19.
An official surnamed Wei from the project registration
office of the DRC confirmed the document's content to Reuters.
The four entities, including two units of listed subsidiary
Hesteel Co Ltd and Xuansteel Co, have vowed to phase
out 9.15 million tonnes of iron capacity and 9.34 million tonnes
of steel capacity, according to the document.
"To cut excess capacity, upgrade technology and clean up the
air for the coming Winter Olympic Games, Hebei Steel Group has
planned to upgrade and relocate Xuansteel," Wei told Reuters,
declining to give his full name.
"Xuansteel will build new modernized plants in Laoting.
After the new facilities pass assessments, a number of out-dated
steel mills of Hebei Steel Group will be halted," Wei said.
Xuansteel will build four new blast furnaces and five new
converters with total iron and steel capacity of 7.32 million
tonnes and 7.47 million tonnes, respectively.
Then, when the outdated steel mills are phased out, that
will cut Hebei Steel's annual iron capacity by 1.8 million
tonnes and drop its steel capacity by about 1.9 million tonnes.
Laoting is a seaside county in the Tangshan city area in
Hebei is home to 104 mills that account for nearly a quarter
of China's total steel output. The province has pledged to cut
steel and iron making capacity by 31.17 million tonnes by 2017
and by 49.13 million tonnes by 2020.
China has launched a campaign to shut down substandard steel
output in its war on pollution and industrial overcapacity. It
is planning to close 100-150 million tonnes of annual steel
production capacity over the 2016-2020 period.
($1 = 6.8920 Chinese yuan)
(Reporting by Lusha Zhang and Beijing Monitoring Desk; Editing
by Tom Hogue)