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By David Stanway
BEIJING, March 7 China's top steel-producing
province of Hebei plans to cut total capacity by 60 million
tonnes, the provincial governor said on Thursday, in a move
aimed at consolidating and cleaning up the chaotic sector.
Hebei in northern China is thought to be responsible for
about a fifth of the airborne pollutants that drift across the
country's capital, Beijing, and bringing the province's
ill-disciplined steel industry to heel is regarded as a key part
of efforts to cut smog in the region.
"We want to reduce output by more than 60 million tonnes and
through this our energy-saving and emission-cutting will greatly
improve," Governor Zhang Qingwei told reporters on the sidelines
of a meeting of the national parliament.
The steel sector is one of six major industries that will be
targeted by the Ministry of Environmental Protection for
"special emissions restrictions" beginning in April.
Zhang did not give a timeframe for the closures, but
industry sources previously told Reuters the deadline for the
capacity cuts would be 2020.
Reuters earlier reported that Hebei was under pressure to
slash capacity in the province by at least 50 million tonnes to
around 200 million tonnes and consolidate the sector under 15
large steel firms.
Overcapacity has been identified as one of the major
challenges facing China's steel sector, with the China Iron and
Steel Association routinely blaming small and privately-owned
mills -- especially those in Hebei -- for "rampantly" expanding
their facilities and eroding sector margins.
The long-awaited restructuring programme is expected to seek
the closure or consolidation of thousands of small mills
throughout Hebei, and is likely to strengthen the position of
state-owned enterprises such as the Hebei Iron and Steel Group
and the Shougang Group.
But Zhang rejected the idea that Hebei's privately-owned
mills would bear the brunt of the restructuring programme,
saying the government "would support those companies that do
well, whether they are state- or privately-owned."
A government plan in January said China would aim to bring
60 percent of total steel production capacity under the control
of its top 10, mostly state-owned, mills by 2015.
China's privately-owned mills produced 362 million tonnes of
crude steel last year, about half of total national output,
according to industry data.
(Reporting by David Stanway; Editing by Clarence Fernandez)