November 15, 2016 / 4:10 AM / 3 years ago

China's Tangshan to build new $5.5 billion steel project, cut capacity: Xinhua

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

SHANGHAI (Reuters) - China’s Tangshan, a major steel-producing city in northern Hebei province, will create a new steel conglomerate and relocate 8 million tonnes of annual production capacity to a site on the coast, the official Xinhua news agency reported on Tuesday.

The city, one of China’s most polluted, will consolidate 10 local steel firms and invest 38 billion yuan ($5.54 billion) to build the new Tangshan Bohai Steel Project, Xinhua reported. The project will be sited 40 kilometers from the city’s old steel district of Fengnan.

Tangshan will reduce total capacity by 3.55 million tonnes as part of the restructuring program, the latest move in an industry drive to shut down outdated plants and improve the environmental performance of its massive steel sector.

The city is under pressure to close 40 million tonnes of annual steelmaking capacity over the 2013-2017 period and has already shut down 31.86 million tonnes, Xinhua said. Before those cuts, Tangshan alone was believed to have around 100 million tonnes of annual crude steel production capacity - more than the entire annual output of the United States.

Plans to build the Tangshan Bohai Steel Project were first mooted in 2008, and construction finally got under way last week, Xinhua said. The project will be completed in four years.

Beijing has been encouraging steel firms to set up high-technology “steel production bases” near China’s coast, where shipping costs and pollution can be minimized.

Shanghai-based Baoshan Iron and Steel Group (Baosteel) has already completed construction work on the Zhanjiang steel project in southeast China’s Guangdong province.

Meanwhile Wuhan Iron and Steel Group, which is in the process of merging with Baosteel, is also building an integrated steel production facility in the port of Fangchenggang in southwest China’s Guangxi region.

Reporting by David Stanway; Editing by Kenneth Maxwell

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