Chinese Steel Mill Leverages on Relocation Initiative to Increase Production Capacity

Source: Reuters

23 August 2018. China’s Baofeng Special Steel, a medium-sized steel mill based in Xuzhou city in Jiangsu, will invest 50 billion yuan ($7.27 billion) to move to the coastal city of Yancheng and build a new steel production base with 8 million tonnes of annual capacity.

This decision came after a push from Jiangsu, China’s second-largest steel-making province, to move steel mills to coastal regions from inland as part of its effort to improve air quality and streamline the smoke-stack industry.

The first phase of construction work is expected to start this month. It will involve an investment of 15 billion yuan to build a steel beam project with 3 million tonnes of annual capacity and a steel pipe project with 600,000 tonnes capacity, according to a statement from Yancheng government on Thursday.

It will also jointly invest 100 billion euros ($114.37 billion) with Poland’s Capital Group Fasing Inc into a steel chain project, with 300,000 tonnes of annual capacity.

Baofeng declined to comment.

The mill has an annual capacity to make 1.4 million tonnes of iron and 1.7 million tonnes of steel. The old factory will be shut by 2020, according to the provincial plan issued last week.

It is unclear from where the medium-sized steel mill would possess an annual production capacity of 5 million tonnes for the new base, as the province has been banned from constructing a steel capacity in order to curb harmful emissions.

Estimated completion date of the new steel hub is also unknown. However, the first phase is expected to be launched in January 2020.

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