On Wednesday, Handan Iron and Steel Group (Hangang), the 10th largest steel maker in China announced on its official website that it received approval to launch a 4.6 million ton high-end steel plate project.

According to the announcement, the National Development and Reform Commission (NDRC) gave its approval on December 31 2005, permitting Hangang to construct a 4.6 million ton high-end steel plate production line in the west wing of the company's headquarters. The total investment will reach RMB 19.368 billion (USD 2.421 billion). Product output will include hot-rolled sheets, cold-rolled sheets, galvanized plates, and color-coated plates.

The first phase of the project will be operational at the beginning of 2008. The second phase is scheduled for completion by the end of 2010. Hangang will also eliminate out-of-date facilities, and cut down on low value-added capacities, including 1.71 million tons of iron smelting capacity, 2.14 million tons of steel smelting capacity, and 2.04 million tons of rolling capacity.

"To prevent an overall increase in steel capacities for the city, other steelmakers in Handan City were asked to reduce low end steel smelting capacities by a total of 2 million tons before the end of 2007," Hu Jihong, official with the metallurgical department of Hebei Development and Reform Commission told Interfax on Thursday.

Hu explained that Hangang's new project was not related to other merger plans put forward by the Hebei government. Negotiations about Hangang merging several other steel operations in southern Hebei have not made substantial progress. A separate merger among Tanggang, Chengde Steel, and Xuanhua Steel (in northern Hebei) was approved by the provincial government in November of 2005.

In reference to the new project, Hu commented that the production lines were the first of their kind (in northern China) and he expected the output to capture a good share of the market in northern China. "Since the whole steel sector is suffering losses due to an oversupply of steel products, only steel enterprises that offer advanced and high quality products will survive the competition," he said.

Hu also revealed that Hangang would cooperate with local private steel companies to finance the project. "Anyway, the government will not provide financial support to the project," he concluded. Hangang produced 7.35 million tons of steel, 5.38 million tons of iron, and 6.96 million tons of steel products in 2005. Sales revenues hit RMB 28.7 billion (USD 3.59 billion) and profits reached RMB 1.45 billion (USD 181.25 million).

Source: Interfax

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