March 7, 2017 / 3:49 AM / 3 years ago

Hebei aims to shut last 'zombie' steel mills in small victory on excess

BEIJING (Reuters) - China’s biggest steelmaking province, Hebei, will close its last “zombie” steel mills by the end of next year, the governor said on Tuesday, marking a small victory in the country’s years-long battle to clean up its air and cut excess capacity.

The sun sets behind a chimney of a steel mill in Tangshan, Hebei province February 18, 2014. REUTERS/Petar Kujundzic/File Photo

This year, the province will shut four “zombie” mills, or plants that have stopped production but have not closed down, and another four in 2018, Governor Zhang Qingwei said at a briefing on the sidelines of the country’s annual parliament meeting.

“We need to cut down the total number of steel plants, they can’t be everywhere,” he said.

The move helps solve a headache that has dogged the country as it has tried to make its bloated steel industry more efficient.

China, the world’s top steelmaker, accounts for half of the world’s output, but its oversupply is four times U.S. output levels.

“Last year was a turning point for us because it was the first time equipment manufacturing overtook steel to become one of our key industries,” measured by tax revenue, said Zhang.

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.

But Hebei, a northern province with some of the country’s smoggiest cities, and other regions still have a fight on their hands to cut the use of dirty fuels like coal and deal with the costly consequences of the restructuring: how to find new jobs or incomes for laid off workers.

Zhang repeated that the province plans to close all steel mills in the cities of Langfang, Baoding and Zhangjiakou, which will co-host the 2022 Winter Olympics with Beijing, by the end of 2020.

He also wants to cut the number of steel plants in the province and build 10 specialty steel mills by the end of 2020.

Reporting by Chen Aizhu, Sue-Lin Wong and Beijing newsroom; Writing by Josephine Mason; Editing by Christian Schmollinger

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