More provinces agree to cut polluting steel production

2007-12-27 22:04:38 Shanghai Daily

EIGHTEEN provinces, regions and municipalities have signed agreements to limit outdated steel-making capacity to 36.1 million tons by 2010, as China imposes a tough stance to boost efficiency and cut pollution in the industry.

The provinces, regions and municipalities, including the Inner Mongolia Autonomous Region and Tianjin, along with Shanghai-based Baosteel Group Corp, also agreed to shut 49.3 million tons of iron-making capacity by that time, the National Development and Reform Commission said.

China's crude steel output is estimated at 490 million tons this year.

"The affected capacities for Baosteel to close will mainly be those belonging to the group, not in the listed arm," a Baosteel representative said.

The NDRC, China's top industry planner, in April signed similar agreements with local governments in 10 provinces and municipalities, requiring them to close 41.7 million tons of outdated steel capacity by 2010, in which 24.2 million tons are allocated for this year.

By the end of November, the group to sign the agreements closed combined steel capacity of 15.2 million tons, or 63 percent of the annual target, the NDRC said.

They had closed 29.4 million tons of iron-making capacity, exceeding the annual target of 22.6 million tons.

Industry officials have said this year's closure target for steel capacity couldn't be completed but there was a sign that central government is intensifying efforts to speed up the progress.

The NDRC said yesterday although some progress had been made, the condition was still not optimistic, adding more work and efforts were required to enhance monitoring on enforcement.

Closure of mills could face setbacks at the regional level as the move could affect local government tax revenue. The NDRC and the Ministry of Finance are considering financial incentives for regional governments to speed up the process, according to United Securities analyst Huang Jing.