Manufacturing News

Minister: no new iron and steel projects within three years

Li Yizhong, minister for the Ministry of Industry and Information Technology (MIIT) revealed on August 13 that MIIT is currently drafting a guide to mergers and acquisitions in the iron and steel industry. He also called for a stop to new iron and steel projects within three years.

He said there is a significant excess of production capacity in the iron and steel industry. The capacity of production reaches 660 million tons while demand is 470 million tons - a surplus of 190 million tons. But at the same time there are a number of new iron and steel projects, and 58 million tons are under construction, "and if this situation continues, there is no way out for China's iron and steel industry," he says.

He believes that a solution is to eliminate backward production capacity. The "Eleventh Five-Year Plan" says the 100 million tons annual production ability of iron is backward, and 50 million tons annual production ability is also under developed, and now we are making progress to eliminate these enterprises.

He called for a stop to new iron and steel projects in three years. MIIT will no longer approve those iron and steel projects which only expand production capacity.

In addition, Li said China's iron and steel industry need to speed up mergers and acquisitions. He cited the success of Hebei Province for its mergers and acquisitions as well as it closures of small iron and steel mills. Among the nation's 660 million tons of iron and steel output, 120 million tons are produced in Hebei Province. Hebei has a great determination to make efforts in the next two or three years to reduce this number to 80 million tons. Mergers and acquisitions is one of the measures, and results are beginning to appear.

In addition, enterprises like Baosteel and Capital Steel also have many successful cases.

"In fact, as long as we recognize the fact and take effective measures, we can get positive results," he says.

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