China announces new steel policy

China announces new steel policy

The Chinese government today (July 20) officially released the country's new steel policy, the main points of which include prohibiting foreign investors from taking controlling stakes in Chinese steelmakers and discouraging the construction of new mills. According to the new policy, foreign investment in China's steel industry is restricted so that only foreign steelmakers with a minimum annual output of 10 million tons of crude steel or one million tons of high alloy steel and their own processing technologies are permitted to invest. However, these companies are prohibited from taking controlling stakes in the local companies. In order to curb the over-expanding industry –there are currently more than 800 steel mills in China– the policy also stresses that the government will not encourage new steel joint ventures or the construction of independent iron and steel mills, smelters or rolling mills. On the other hand, the new policy encourages mergers of small steelmakers in Northern China with larger steelmakers. Such mergers would allow the country's industry as a whole become more competitive and would enable more efficient raw material and energy usage. The policy also aims to curb over-production in Eastern China, develop the ports in Southeast China and move steel mills out of the urbanized sections of major cities. The policy also encourages imports of iron ore, coking coal, manganese and nickel.