China to tighten steel capacity swapping, boost domestic iron ore output

eijing — China will

approvals of steel capacity swapping between companies and ban all new steel capacity in any form, the country’s economic planner said, in order to streamline the sector.

The announcement follows illegal capacity expansions approved by local governments under the cover of capacity swaps, where companies move capacity between different regions to reduce the concentration of plants in polluted industrial areas. The new facilities have undermined Beijing’s efforts to reduction pollution and reduced steel capacity.

Additionally, China will control steel-making capacity in key pollution-control areas, including the Beijing-TianjinHebei region and the Yangtze River Delta, by imposing more strict environmental, energy, land and water usage standards, the National Development and Reform Commission, NDRC, said in a statement.

China, the world’s biggest steel producer, has eliminated more than 150 million tonnes of crude steel capacity in the past three years. There are around 980 million tonnes remaining, nearly half of the world’s total.

The central government will carry out inspections on capacity cuts to prevent closed projects from reopening, according to the NDRC statement.