Shougang Corp, China's ninth-biggest steel mill, plans to cut its workforce by 21 percent by the end of this decade as it moves production out of Beijing.

The group, owned by the Beijing municipal government, will reduce the number of its employees to 65,000 by 2010 from 82,500 last year, Shougang Chairman Zhu Jimin told China Daily.

In the meantime, the firm's workforce in the city its current home base will be axed to 30,000 from more than 50,000, Zhu said.

However, Shougang aims to double its workers' salaries by 2010 from 2005, he said.

Last year, its employees' average income stood at 37,000 yuan, up 8.4 percent from 2005.

Following a central government order, the group plans to halt all crude steel production in Beijing as part of efforts to ease pollution. Formed in 1919, Shougang is one of the city's biggest polluters.

Earlier this month, it started building a new 9.7-million-ton plant in neighboring Hebei Province with Tangshan Iron & Steel Corp, China's No 3 steelmaker. The total cost of the new factory is estimated at 66.8 billion yuan.

But the group will keep its headquarters in Beijing as well as its non-steel businesses such as machinery and electronics, real estate and other service sectors.

Liu Shuiyang, Shougang's vice-president, said there would be 7.5 square kilometers of spare land in the Shijingshan District on the western outskirts of Beijing when it moves its steelmaking facilities, which could help the firm raise more than 20 billion yuan.

The money would be used for payout to its redundant workers and build the new plant in Hebei, Liu said.

A top official from Shijingshan District said the local government and Shougang would jointly set up a service center to help laid-off workers find new jobs.

The company's plan to cut jobs is also seen as a streamlining measure taken by many of China's State-owned industrial groups to improve productivity.

Zhu said Shougang aimed to double its steel production, turnover and profit by 2010 from 2005.

It plans to produce 20 million tons of steel in 2010. Last year, its steel production amounted to 10.5 million tons.

The company posted a profit of 2.8 billion yuan in 2006, up from 2.3 billion yuan the previous year. Its turnover climbed by 8.5 percent to 87.5 billion yuan last year.

Shougang also aims to be one of the world's top 500 multinational companies by 2019.

The group now has an annual steel production of 8 million tons in Beijing and another 4 million tons in Hebei.

Zhu said it planned to cut Beijing production capacity by 4 million tons by the end of this year.

He said earlier that Shougang was considering merging with smaller Chinese steel firms to expand in China, which has been the world's biggest steel producer for a decade.

But he didn't reveal details.

Crude steel production in China surged by 18.5 percent to 418.8 million tons last year from 2005, according to data from the China Iron & Steel Association.

The association predicted that production this year would grow by 10 percent.

(China Daily March 29, 2007)