China’s Ministry of Industry and Information Technology published a draft regulation on its Website Wednesday, setting new environmental and power standards for steelmakers and threatening closures to curb pollution and overcapacity, reported Bloomberg.

Plants should cap effluent discharge at 2 cubic meters and sulfur dioxide emission at 1.8 kilograms for every ton of steel made, according to the draft.

China has rejected almost $29 billion of industrial projects this year and is planning measures to close plants to curb pollution, it said last month. A steel oversupply is overwhelming demand created by the government’s stimulus, and depressing profits for steel mills.

Government departments shouldn’t approve construction and upgrading if the mills can’t meet the requirements and shouldn’t issue effluent discharge and land permits, the draft said.

Banks shouldn’t give credit support and government departments must not issue iron ore import permits and supply the steelmaking ingredient to mills failing to meet the new requirements, the Chinese ministry said.

Steel plants should cap energy consumption of blast furnaces at 411 kilograms coal equivalent and fresh water use at 6 tons for each ton they produce, the statement said.

The ministry also proposed that carbon steel mills should have a minimum production capacity of 1 million tons, and specialized makers of at least 500,000 tons. It didn’t suggest penalties for those failing to meet output limits.

China is planning measures to close plants in steel, aluminum, cement, coke, paper, glass and utility industries, the Ministry of Environmental Production said Nov. 13. The NDRC is seeking to address the slow pace of consolidation in industries with overcapacity, it said Nov. 27.

Source : Konaxis

Chinese media reports that Hunan Valin Steel Co Ltd of the Hunan Valin Group plans to acquire two other Chinese steel mills in Henan and Jiangxi provinces. « This year, Valin will buy into two steel mills, one in Henan and anther in Jiangxi province, in a move to achieve low-cost expansion, » Valin president Li Xiaowei was quoted in the reports.

However, the newspaper did not identify the target companies or a detailed timeframe for Valin’s acquisition.

« Many people suggested to me that we should suspend some projects during the crisis. We decided to not pause the plans, even for one day, after careful research, » Li told the newspaper.

China’s Hunan Valin Iron and Steel Group is the second-largest shareholder in Australian iron ore miner Fortescue Metals Group after it paid $1.2 billion for a 16.5 percent stake in Fortescue, Australia’s No. 3 iron ore miner, last month. Hunan Valin Iron & Steel Group Co Ltd had agreed to acquire a 9.07% stake in Fortescue Metals Group Ltd from Harbingur Capital Partners and 7.42% stake via subscription in newly issued shares.

Chinese firms are being encouraged to scout and buy natural resource assets overseas to ensure the much needed raw materials supplies for the world’s top mineral and metals consumer.

Valin was China’s ninth-biggest producer of crude steel in 2008. China has the world’s biggest steel industry but is very fragmented, and its largest mills are much smaller than those of the global market leaders.

The government is pushing for mergers between companies.

Valin Group’s listed subsidiary, Valin Steel Co Ltd, is one-third owned by Arcelor Mittal , making it the only major Chinese steel company in which a foreign investor owns a direct stake.

Source : Konaxis