Government exposure deadline for steel mill relocation

As early as 2012, there were rumors that Hangzhou Iron & Steel Co., Ltd. would have to relocate. In June of that year, the then Vice Minister of the Ministry of Environmental Protection, Zhang Lijun, went to Hangzhou Steel to inspect and guide the work. At that time, Zhang Lijun pointed out that Hangzhou Iron & Steel Co., Ltd. must formulate a timetable for relocation work, and do a good job of early preparations for relocation programs, environmental assessments, etc. In the near future, an atmospheric pollution control plan announced by the Hangzhou municipal government, Hangzhou Iron & Steel Co., Ltd. was impressively In this plan, the government has for the first time exposed the relocation deadline of Hangzhou Iron & Steel Co., Ltd. The plan calls for Hangzhou Iron & Steel to complete the relocation by the end of 2017.

Hangzhou Iron and Steel also issued an announcement to prove the matter. The announcement stated that the preparatory work for the relocation of urban steel plants will be actively carried out. At the same time, the company stated that the project of the relocation project needs to be approved by the relevant state departments. At present, it has not officially reported the relocation plan, nor has a clear timetable.

For the relocation, relevant person in charge of Hangzhou Iron & Steel Co., Ltd. told the reporter of Securities Daily: “It was mainly due to environmental governance issues.”

Multiple pressures to remove dust settled. As early as in 2012, there were rumors that Hangzhou Iron & Steel Co., Ltd. would have to relocate. In June of that year, the then Vice Minister of the Ministry of Environmental Protection, Zhang Lijun, went to Hangzhou Steel to inspect and guide the work. At that time, Zhang Lijun pointed out that Hangzhou Iron & Steel Co., Ltd. must formulate a timetable for relocation work, do a good job of early preparations for the relocation plan, environmental assessment, etc., and at the same time do a good job of the staff's ideological and stability work. However, since the relocation will involve issues such as funding, personnel placement, location selection of new production capacity, and approval of relocation capacity, there has been no substantive progress in the relocation of Hangzhou Steel.

The relocation of the Hangzhou Iron & Steel Co., Ltd. plant site was once again due to the announcement of the “Hangzhou Atmospheric Pollution Prevention and Control Action Plan (2014-2017)” announced by the Hangzhou municipal government on May 21st. It was proposed that by 2017, the air quality in Hangzhou will improve overall. The number of contaminated weather has decreased significantly; the concentration of PM10 in the city has fallen by more than 10% from 2012; the concentration of fine particulate matter (PM2.5) in the city has fallen by more than 26% from 2013.

In order to accomplish the goal, the "plan" has deployed the "Ten key measures table" for atmospheric pollution control in Hangzhou in the next four years, which requires Hangzhou Iron & Steel Group to complete the relocation work by 2017. This also means that the relocation plan of Hangzhou Steel, which lasted for two years, has finally been nailed.

In response, analyst Zhang Lin said in an interview with a reporter from Securities Daily: “Hangzhou Iron & Steel’s relocation implementation is reasonable. First, Hangzhou Steel’s economic efficiency is not optimistic; secondly, Hangzhou is a national tourist city, and environmental protection is a top priority. This has given Hangzhou Steel a great deal of pressure. In recent years, the state has been stricter on environmental protection requirements, and Hangzhou Iron & Steel has no extra funds to invest in environmental protection. Multiple pressures have led to the relocation of Hangzhou Steel."

According to the first quarterly report of Hangzhou Iron & Steel Co., Ltd., the company achieved operating income of 4.032 billion yuan in the first quarter, a year-on-year decrease of 6.56%, and net profit of 159.2728 million yuan, a year-on-year decrease of 158.03%. The operating conditions are not optimistic.

The relocation of bones is not optimistic about the future prospects for the relocation of Hangzhou Iron and Steel, deputy director of the Metallurgical Industry Economic Development Research Center Liu Haimin told reporters: "To enlarge the world, in addition to China, other countries have no steel factory relocation As a precedent, if the study was conducted in the 18th century, only a steel plant was relocated in the United States, but this was caused by labor problems and it was not representative. At present, China's steel mills that have been relocated are basically losing money, mainly because of steel. The problems involved in the relocation of the factory are numerous and complex. First of all, relocation and reconstruction are two different issues. The relocation of domestic steel companies is actually abandoning reconstruction. After the original equipment is removed, it cannot be reused, and a steel plant is rebuilt. The cost required is great; secondly, it is well known that China’s steel production capacity is in surplus. If Hangzhou Steel produces steel that can be competitive, Hangzhou Steel obviously does not have this strength.”

In this regard, Zhang Lin also holds the same view: "Newly built lair, the first investment. For the steel industry, it can be said to be huge amounts of money; Second, coincides with the market is weak, the relocation of the long-term planning with the actual needs of the gap In Shougang, for example, they have excellent technology and good historical talents, but after moving to the steel town of North China, the huge amount of investment also encountered a steel bear market, the cost is difficult to return, so the economic benefits have not been too Thirdly, it involves the issue of staff resettlement, which is also a key issue. If it is an off-site resettlement, many workers' unions will not move along with the steel mills, and the relocation of those who are unwilling to leave will require a lot of funds. ."

The reporter learned that Chongqing Iron and Steel had preceded a relocation. In 2012, Chongqing Iron and Steel relocated the core production area to Changshou Development Zone. However, due to the huge amount of investment in the newly-built factory area during the relocation process, Chongqing Iron and Steel Group undertook the major investment tasks of the new plant. . After completion, Chongqing Iron & Steel acquired the new plant-related assets from Chongqing Heavy Steel Group for 16.937 billion yuan, while the old plant area's loss of fixed assets due to environmental protection relocation was 2.3 billion yuan.