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Beijing to push mills for low emission upgrading in 2019


China’s central government is keeping pollution reduction a business priority for the nation’s steel industry this year, with the Ministry of Ecology and Environment (MEE) repeating its determination to persuade steelmakers to undertake upgrades of their works to achieve ‘ultra-low’ emissions – one of the three key measures the ministry aims to adopt this year to combat air pollution.

The promotion of facilities modification for ‘ultra-low’ emissions in the steel sector this year is a task assigned by the State Council – China’s cabinet – after such a campaign was widely and successfully implemented in China’s coal power industry, stressed Liu Bingjiang, head of the MEE’s atmospheric environment department at a press conference on January 21.  

Ultra-low emission standards set very tough caps on air pollutants emitted during all steelmaking processes – from iron ore processing, sintering, coking, iron-making, steel-making and steel rolling to transportation, according to a draft plan formulated by MEE in May 2018, as Mysteel reported. Liu said during Monday’s conference that the finalized plan would be issued as soon as possible.

Chinese steelmakers are being requested to complete the necessary modifications by 2020, as stated in the draft plan, and meeting that deadline will impose substantial pressure on the mills, market sources indicated. Crucially, the steelmakers will need to invest heavily in modern and environmentally friendly facilities to achieve such low emissions.

According to Chen Jian, chief engineer with the department of energy and environment at Baoshan Iron & Steel Co (Baosteel), modifying facilities for greener production will cost China’s steel industry around Yuan 80 billion ($11.8 billion). For Baosteel alone, the expense for upgrading will be nearly Yuan 10 billion, Chen said in a recent interview with Shanghai Securities News. Baosteel is the listed arm of China’s biggest steel producer China Baowu Steel Group Co.    

Xu Xiangchun, a senior steel analyst who has been monitoring China’s industry for several decades, agreed with Chen’s horrendous cost estimate. Moreover, Xu maintained that the impact on the steel mills’ business of modernizing facilities to meet Beijing’s ‘ultra-low’ emission standards will be greater than that of the production curbs many steelmakers have endured in the winter months or whenever air quality has deteriorated in the past two years, although both measures have the common goal of reducing air pollution.

“Previously, during the production curbs, the margin losses generated by curbed production could partly be offset by the price increases that the reduction in supply usually encourages,” Xu said. However, “to carry out low emission modification, steel producers need to invest a pool of money to purchase and install the equipment, and the expense incurred to operate the environmental protection equipment is also huge,” he stated.

Indeed, covering the cost of keeping their 'green' facilities running will add another Yuan 300/t to the mills’ average production costs, according to China Iron & Steel Association deputy secretary Chi Jingdong.

In an interview with China Metallurgical News, Chi rammed home the enormity of the financial challenge the mills face, saying that “the costs in electricity charges just to keep dust-cleaning equipment installed on a 3,000-4,000 cu m blast furnace operating for a single day will be enough to buy a Mercedes-Benz!” Chi said.  

As of now, no Chinese steel mills have been officially reported to have completely met the 'ultra-low' emission standards, though many mills are striving to move towards the goal, Mysteel understands.

Written by Olivia Zhang, zhangwd@mysteel.com

Edited by Russ McCulloch, russ.mcculloch@mysteel.com

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