According to the new steel industry development scheme announced by the local authorities in the eastern Chinese province of Shandong, the provincial government plans to make more investments to accelerate the construction of Rizhao Steel's key steelmaking base, to speed up reorganization among the steel enterprises in the province, and to quicken the transfer of the local steel industry towards the coastal regions.
As projected in the scheme, the construction of Rizhao Steel's key steelmaking base will be the core task during the structural adjustment of the industry in the province. The scheme states, "We should take advantage of the (central) government's political support and grasp the opportunity provided by the low levels of current construction costs. Besides, we should implement the preliminary works for the construction of the steelmaking base, and advance the project approval in order to ensure early commissioning of the project."
Currently, only 20 percent of steel industry production capacity in the province is based in the coastal areas which have advantages in terms of raw materials, transportation and markets. Most steel manufacturing enterprises are hindered by lack of resources, transportation, etc. In general, the overall structure of the steel industry in Shandong Province does not correspond with the development trend for the future and the country's steel industry development policy.
Given the abovementioned problems, the government of Shandong states in its scheme that elimination of outdated capacities and acceleration of the transfer of inland capacities towards the coastal regions must be given top priority. Meanwhile, applications for the establishment of new steel mills will no longer be approved, and small and medium sized steel enterprises and enterprises lacking official permission will have to be eliminated. The provincial government is targeting an annual crude steel production capacity not greater than 50 million mt by 2011.