Shanghai-based Baoshan Iron and Steel (Baosteel) started a green steel project in the city of Zhanjiang in China’s southern Guangdong province in 2015. It marked a milestone for the steel-maker and for China’s steel industry. And now, Baosteel Zhanjiang has become one of the first steel companies to apply the country’s strictest environmental regulations, with advanced environmental equipment.
 
Production at the plant is controlled by Baosteel Group, a Shanghai-based supplier of steel sheets for about half of the vehicles made in the country. With its second blast furnace going into operation only in July, the company is expected to reach an annual capacity of eight million tons of steel products next year.

“The steel industry in China needs to actively cut capacity. Baosteel Zhanjiang has been a result of phasing out obsolete capacity in Guangdong and adjusting the capacity in Shanghai,” said Xia Zhengda, director of Baosteel Zhanjiang Corporate Culture Dept..

Xia Zhengda, director of the corporate culture department at Baosteel Zhanjiang, says every one yuan invested in a steel plant is estimated to likely lead to five yuan invested in other related sectors. The projects are meant to supply southern China and Southeast Asian markets with high-quality steel sheets.

“The steel base in Zhanjiang will play an important role in optimizing the country's steel industrial layout and promoting structural adjustments,” Zhanjiang mayor Wang Zhongbing said.

Wang said Baosteel Zhanjiang is fulfilling all its environmental commitments.

Of the company’s combined 50 billion yuan investment, 6.4 billion yuan is allocated to the development and implementation of environmental technologies and equipment.

Amid the market downturn and slowing economic growth, the Zhanjiang project is expected to boost market confidence and set a good example of phasing out old-fashioned capacity with eco-friendly technology.

Resources produced during steel manufacturing, such as coal gas, may by shared by a neighboring refinery.

In Guangdong, annual demand for steel is estimated at about 60 million tons. But local steel mills can supply only about 10 million tons. Baosteel’s Zhanjiang project will offer an alternative to local buyers.