March 1, 2017 / 6:55 AM / 10 months ago

China orders aluminum, steel cuts in war on smog

SHANGHAI/MELBOURNE (Reuters) - China has ordered steel and aluminum producers in 28 cities to slash output during winter, outlined plans to curb coal use in the capital and required coal transport by rail in the north, as Beijing intensifies its war on smog, a policy document shows.

The 26-page document dated Feb. 17 and seen by Reuters did not include some stringent steps proposed in a draft policy to slash fertilizer output and introduce a full ban on coal being handled at Tianjin, one of the country’s busiest ports.

The government has called on steel producers to halve output in four northern provinces - Hebei, Shanxi, Shandong, Henan - as well as Beijing and Tianjin, during the peak winter heating months around late November to late February. The size of the cuts will depend on the level of regions’ emissions cuts.

Steel mills in Hebei, China’s top steel producing province, must meet targets for cutting overcapacity this year, ahead of schedule. Cuts at mills in the cities of Langfang and Baoding should be a top priority, the statement said.

Producers must also cut aluminum capacity by more than 30 percent and production of alumina, an ingredient used to make the metal, by more than 30 percent across the 28 cities.

Based on the cuts over three months, the measures would reduce China’s total annual steel output by 8 percent annually and aluminum output by 17 percent, according to Reuters calculations.

Transporting coal by truck in Hebei and Tianjin will be banned from the end of September, forcing consumers, miners and traders to use the railroad, it said.

The joint statement was issued by the Ministry of Environmental Protection (MEP), Finance Ministry, National Development and Reform Commission (NDRC) and the National Energy Bureau as well as regional governments.

An official from the MEP confirmed the document was authentic. The other government departments did not respond to requests for comment.

The policy comes ahead of the government’s annual parliamentary session, which starts on Sunday when tackling pollution will be a big topic of discussion.

China’s northeast has battled some of the worst pollution in years this winter as emissions from heavy industry, coal burning in winter and increased transport have left major cities including Beijing blanketed in thick smog.

The latest order comes after the MEP proposed these measures, as well as other more stringent steps, in a draft policy document seen by Reuters last month.

The regions affected are some of the country’s most populated and most smog-plagued and account for one third of China’s crude steel output. Hebei, Henan and Shandong are the top three aluminum producing regions accounting for around 70 percent of total output.

Reporting by Ruby Lian in SHANGHAI, Melanie Burton in MELBOURNE; additional reporting by Hallie Gu, Chen Aizhu, Dominique Patton and Lusha Zhang in BEIJING; Writing by Josephine Mason in BEIJING; Editing by Kenneth Maxwell and Christian Schmollinger

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