Chinese Steel Major Hansteel to Relocate its Operations amid Pollution Concerns

Handan Iron and Steel Group also known as Hansteel, a subsidiary of China's second largest steel producer Hebei Iron & Steelworks and located in Handan city is set to move its older production facilities from the city center to an area about 90 kms away as a part of an ongoing national drive to improve air quality in one of China's most polluted provinces.

This move by the Handan Group has come two years after the discussion began on the same. Such plans have been more difficult to implement in China, where most major steelmakers are state-owned, because of the big costs involved, as well as resistance from workers who don't want to move to more remote locations.

As per the plan published, Hansteel will shutter about 7.1 MnT of annual iron-making capacity and 5.9 MnT of steel-making capacity with the move, which involves relocation of the older of its two main facilities in the Handan city center. The construction for the new factory will begin next March, with output slated to start in December 2021.

Hansteel is a key steel mill in Handan with 13 MnT of iron- and steel-making capacity. As China's biggest steel-making province, Hebei is one of the nation's most heavily polluted, causing frequent smog problems both locally and in adjacent Beijing. Handan's smog problems are particularly bad as it was the only city in Hebei that failed to meet its obligations for air quality improvement in 2017, and was singled out by an environmental inspection team from Beijing again in 2018 for falling well short of some of its targets. The team specifically pointed the finger at the older production facility, saying it needed to be moved from the city center into an industrial area.

Despite controversy surrounding such relocation, many factories have already made similar moves from city centers around China. Since the end of 2017, some 100 million tons of capacity have been relocated in regions like Hebei, Jiangsu, Guangxi and Shandong. As China's largest producer, Hebei has either moved or is preparing to move more than 20 MnT of annual raw steel production capacity.