FILE PHOTO: Chinese national flags are flying near a steel factory in Wu'an, Hebei province, China, February 23, 2017.   REUTERS/Thomas Peter
FILE PHOTO: Chinese national flags are flying near a steel factory in Wu'an, Hebei province, China, February 23, 2017.   REUTERS/Thomas Peter

Twenty-nine Chinese steel firms have had their licenses revoked as a result of long-term production suspensions or failing to comply with state capacity and pollution requirements, China’s industry ministry said on Monday.

The Ministry of Industry and Information Technology (MIIT) released a list of 29 firms that will be removed from its official register of steel enterprises. Most have already stopped producing steel, but some had illegally expanded production or violated state closure orders.

China is now in the middle of a concerted effort to reduce the total number of its steel enterprises by shedding 100 million to 150 million metric tons of excess production capacity over the 2016-2020 period and by shutting around 100 million tonnes of low-grade steel production by the end of June this year.

Another 40 steel firms have been asked, according to the statement posted on the website of the MIIT, to make changes in areas such as environmental protection and safety.

The majority of the 40 steel firms were accused of failing to comply with emergency output restrictions during periods of heavy pollution, and they must fully “rectify” their violations within a prescribed period, the industry ministry said, without giving a specific timeframe.

China set up an official steel firm register in 2009 in a bid to impose order on a chaotic and poorly regulated industry. It blamed ill-discipline and “malicious competition” for undermining the position of Chinese steel companies during price negotiations with major overseas iron ore suppliers.

Before the register was launched, even large-scale state steel producers were not technically authorized to produce steel, and the industry was dominated by a grey economy consisting of hundreds of low-end private producers.

One of the aims of the register was to help identify the mergers and closures required to meet a target to put 60% of China’s total steel capacity in the hands of its 10 biggest producers by the end of 2015.

However, industry consolidation rates actually fell to 34.2% over the 2011-2015 period, from 48.6% in the previous five-year period, and China has now pushed back the 60% target until 2025.

According to figures published by the official China Metallurgical News earlier this month, 292 out of a total of 635 firms in 12 provinces and cities have already ceased production or been shut down completely.

Metallurgical News also said 18 out of 64 firms in China’s biggest steel producing city of Tangshan have ceased production or been shut down as a result of the latest campaign.

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