Shougang Group, China's fourth largest steelmaker by output, intends to move all of its polluting plants out of the capital by 2012, according to its latest restructuring plan.

The proposal, which has been presented to the State Council for approval, could bring to an end a lengthy debate concerning the difficulties and cost of relocation and arrangements for their 120,000 employees.

Shougang's current base in Beijing's western suburbs, the capital's biggest polluter with chimneys belching out thick clouds of smoke, is expected to become the company's new headquarters.

Company sources said they are planning to develop non-steelmaking sectors such as real estate and mechanical and electrical industries at the vacated sites.

A number of real estate giants from Hong Kong and overseas are talking with Shougang over the prospect of cooperation, they said.

As for the 85-year-old company, whose profit and tax contribution account for 3.3 percent of the city's annual revenue, the relocation, estimated to cost some 40 billion RMB (US$4.8 billion), may be easier said than done.

But some progress has already been made, even though they are still to get government approval.

Shougang signed an agreement with Tangshan Iron and Steel Group, the country's sixth largest steel maker, to jointly invest 48.6 billion RMB (US$5.9 billion) in a steel mill at a new base, expected to have an annual production capacity of 15 million tons.

This would be on the island of Caofeidian, 2 kilometers in length, 1 kilometer in width and located 80 kilometers south of Tangshan, a coastal city of Hebei Province. It has a natural harbor capable of berthing cargo ships with a loading capacity of more than 200,000 tons, which may relieve raw material transport bottlenecks and reduce costs.

Chen Maopeng, an official from Hebei's Development and Reform Commission, was quoted by the Economic Observer as saying that in its first phase the base could produce 8 million tons of steel annually if it went ahead.

There were no reports of the environmental impact that could be expected on the area of Caofeidian, which is already home to a number of industrial projects, or whether the new base would be any less polluting than the current Beijing plants.

Shougang is locating in other areas of Hebei, including a steel-smelting plant in Qian'an, with an annual production of 2 million tons, that was finished in October.

In Qinhuangdao, Shougang has taken part in the building of a plate-making company that can now pump out 400,000 tons per year but could be expanded to 1.2 million tons in the near future.

"The relocation is an enormous opportunity for Shougang," Zhu Jimin, president of Shougang, was quoted by the 21st Century Economic Report as saying, coming as it does at a time when many major steel makers are in merger talks with smaller players.

Whether this possible step forward for Shougang will hold any benefits for China's environment and its people's health is as yet unknown.

(China Daily December 10, 2004)