Chinese Steel Major Baowu Group to Set up a 20 MnT Steel Plant in Eastern China
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According to the reports, Chinese steel major, Baowu Group is coming up with high-class steel production project with a capacity of 20 MnT in the coastal city in eastern China.
The new project will be located in Yancheng city of Jiangsu province and once launched, Baowu will shut one of its plants in Nanjing city, the provincial capital of Jiangsu.
This move is a part of the Chinese government's efforts to move steel mills to new areas on the coast over the next few years in order to reduce air pollution and to make the industry more efficient.
The construction of the first phase of the project with a capacity of 8-10 MnT will start from 2019 and is expected to be completed within three years. The first stage of the project is estimated to cost 50 billion yuan (USD 7.20 billion), which will be paid by its own cash and fund-raising. The project is likely to include ports, coking plants, power utilities, sintering, iron, and steelmaking as well as steel-rolling plants.
In 2015, Baosteel acquired its rival company, Wuhan Iron and Steel, and formed the country's biggest steel company Baowu Group. The group has total capacity nearing 70 MnT and produced about 65.4 MnT of steel in 2017.
Baowu and Ansteel denies merger speculations
A few months back, speculations were rife in the market that China's two top steel mills, Baowu Group, and Anshan Iron & Steel Group Co (Ansteel) are likely to go for the merger as a part of Chinese government's target of consolidation of steel mills. However, in the last week of November, both the companies have officially denied the market speculation on the possible merger.
Nevertheless, despite the clarifications from the two companies, the industry experts believe that the likelihood of their mergers still lingers in the future. This is because in order to increase the contribution of top steel mills to country's steel output to 60% by 2020, China may have to resort to some administrative and government initiatives instead of relying purely on market-driven forces and the much efficient way to do this is to combine the top steel mills to reach the target.
