China Orders Revocation of 19 Steel Companies and Issues Warning to 12 Companies on Environment

China's MIIT (Ministry of Industry and Information Technology) has announced a list of 102 companies included in the second batch of its restructuring plan for the steel industry. Out of all the firms included in the list, about 19 companies have been revoked (officially cancel), 12 companies have been issued a warning on environment, safety, and compliance issues, 24 companies have been asked to change their names and 47 companies have been asked to change the equipment used in their steel manufacturing plants.

What does this order mean?

According to the notice issued by the MIIT, the inclusion of a company's name in the revocation list indicates that there is a large gap between these companies and the regulatory requirements, and does not mean that they cannot perform steel production and operations. These companies mainly have the five types of situations which are as follows:

o They are included in steel capacity reduction task and their smelting equipment has been closed down or they have withdrawn as a whole.

o They have merged and restructured by other regulated companies, or their business licenses have been canceled.

o Due to market reasons they have stopped production over a year or more and has not resumed its operations.

o Due to the needs of urban development, their production has been suspended across the board, and smelting equipment is used for steel production or other projects.

o The inspectors from Central Environmental Protection has highlighted major issues in the company.

The inclusion of the companies in rectification list (warning list) indicates that there is a need for rectification (correction) in environmental protection, quality, safety, and energy consumption in the production and operation activities of these enterprises, and therefore 'yellow card warning' is given.

For enterprises that have been included in the list of regulatory rectification, they must comply with the rectification requirements for environmental protection and safety, and timely rectify them within the prescribed time limit; enterprises that have already implemented corrective measures must learn lessons and continue to maintain good standard management.

The 47 companies that were asked to change their equipment were in the process of removing capacity and had withdrawn some of their smelting equipment.

After this dynamic adjustment, the number of enterprises in the announced steel industry has been reduced to 256. In order to further strengthen post-event supervision and encourage enterprises to continue to standardize their operations, the ministry will continue to increase the frequency of dynamic regulation of the steel industry.

The sequence of events that has happened in the past

The Chinese steel ministry has been carrying out standardized management of iron and steel industry since 2013 by announcing a list of 304 standardized companies in three batches, eliminating the blind spots in the industry management and laying the foundation for carrying out post-event supervision.

In 2015, the Ministry of Foreign Affairs launched a standardized dynamic management work to further strengthen post-event supervision, regulatory requirements and laws governing production and business activities of individual companies.

In April 2017, MIIT announced its first list under "iron and steel industry, standardize enterprise management approach", ordering revocation of 29 companies and of 40 companies requiring regulatory reform of the steel industry failing which they had been ordered to close down within a certain time limit.

This restructuring plan for steel sector has been launched by the government through the procedure of self-inspection by the companies, inspection by provincial-level industrial authorities, preliminary examinations by central enterprises, expert verification, and via online publicity.