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Tuesday March 21, 10:47 AMChina says no new steel mills, to close small onesBEIJING, March 21 (Reuters) - China's cabinet said it would not approve construction of any new steel mills and reiterated it would shut down small, outdated plants in an industry plagued with too much capacity and a raw material shortage.The State Council also urged tighter controls on lending to and land use by industries plagued with overcapacity, including the aluminium, coke and automobile sectors. "In general, the problem of over-investment leading to a capacity surplus in some industries has not been solved completely," the State Council said in a document posted on the central government Web site (www.gov.cn) on Monday. The State Council said it would speed up mergers and closures of small plants in those industries this year. The government's steel industry policy encourages its biggest mills to form several steel groups with annual capacity of more than 30 million tonnes, it said. Top Chinese steel maker Baosteel Group, parent of Baosteel Iron and Steel Co. Ltd. , had sought to build a greenfield steel plant with an initial capacity of 10 million tonnes in southern China's Guangdong Province. Beijing has dragged its feet for more than a year on approving the proposal. The government wants China's big steel firms -- Anben Iron and Steel Group in the northeast, Shougang Group in the north, Baosteel Group in the east and Wuhan Iron and Steel Group in the centre -- to play a key role in consolidating the sector, senior officials say. Industry analysts say simple mergers will make Chinese firms bigger but not better, unless local governments are willing to close inefficient mills and lay off tens of thousands of workers. |
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