China’s state-owned Shandong Iron & Steel Group Co Ltd has shut all production lines of its subsidiary Jigang Group Co Ltd, as one of China’s largest steelmakers completes a year-long production upgrade, state-owned media Xinhua reported on Monday.
Of the 5.7 million tonnes steel capacity at Jigang, around 4 million tonnes will be transferred to a new site at its Rizhao Quality Steel Products Base on the east coast, said two people, who are familiar with the move.
With total investment of 56.7 billion yuan ($8.34 billion), the Rizhao plant will have iron-making capacity of 8.1 million tonnes, billet steel capacity of 8.5 million tonnes and steel-making capacity of 7.9 million tonnes.
Rizhao will start a part of its production in late August and be fully operational next year, as part of layout optimisation and capacity upgrade plan at Shandong Iron & Steel Group.
In the past 10 years, Shandong Iron & Steel Group has shut down the capacity of more than 6 million tonnes at Jigang to make way for new capacity in Rizhao base.
Shandong Iron & Steel Group ranked sixth in terms of steel output with crude steel production of 23.02 million tonnes in 2016, data from The World Steel Association showed.
The eastern province of Shandong has pledged to cut 150 million tonnes of annual steel capacity by 2020 as part of the government’s efforts to tackle pollution and make bloated steel sector more efficient.
All 33,000 employees of Jigang Group will face relocation once the production lines are dismantled this month.