(Yicai Global) April 18 -- Hebei province has committed to eliminating retrograde iron and steel production to improve the air quality in areas surrounding Beijing, China's capital. Baoding City, Hebei province, where the iron and steel business is concentrated, has decided to entirely withdraw from this industry before the end of this year. The government recently designated Xiongan New Area as a new district to ease the pressure on non-capital industries in the capital. Xiongan New Area straddles three counties within the administrative area of Baoding City. The development of Xiongan New Area will displace the local air-polluting iron and steel industry from its environs.
An initial meeting for air pollution prevention recently held in Baoding determined that all local iron and steel businesses be shuttered by this year.
The government proposed the plan to eliminate all iron and steel businesses in Baoding early last year, said Liu Bin, a researcher with Mysteel [SHE:300226].
By 2020, iron and steel businesses in the municipalities of Zhangjiakou, Baoding and Langfang -- all in Hebei province -- will withdraw from the market, while those in Qinhuangdao and Chengde, Hebei -- will retreat by 50 percent in principle, People's Daily earlier reported. Iron and steel factories in other cities and suburbs will also close down or move into industrial parks and coastal regions.
Hebei boasts the highest iron and steel production of any Chinese province.
Intermittent production restrictions have long been a normal situation for iron and steel enterprises, which are caught in a cycle of 'production restriction-air quality improved-production recovery-pollution again-restriction again,' several insiders told Yicai Global. This decision by the Baoding government to completely cut all capacity is also probably one means to end the sporadic production restrictions that have been in place for years.
The iron and steel industry is critical for local governments in employment, taxation and banking. If the government really expects to eradicate this industry from local economies, it will face many challenges, for such action requires a full set of supporting measures, including the re-placement of personnel and debt restructuring.