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Shougang steels for life beyond Beijing's borders

By Li Jing (China Daily)
Updated: 2008-08-07 16:43

To clean up the smog-ridden Beijing skies, the authorities had long been considering relocating steelmaker Shougang Group from the western outskirts of the capital. Seven years ago, China's successful bid to host the Olympics and commitment to a green Games only accelerated the move.

Today, only one of the five blast furnaces in Shougang's Beijing plant is still working and emissions have been cut by 70 percent compared with last year. By the end of 2010, even this blast furnace will have gone.

Today, the remaining Beijing plant hardly resembles its old self.

Located in the middle of the factory, the tranquil Qunming Lake is dotted with pavilions, terraces and an arched bridge, like in any traditional Chinese garden. The only difference is the water, which is recycled from the four huge cooling towers behind the lake.

The gigantic No 4 blast furnace stands under the clear sky in silence. The soot and rust cover the intricate network of stacks and pipes. An old-fashioned train is parked on the tracks.

Lu Chunzheng, director of the iron mill, tells China Daily that the 35-year-old blast furnace ceased operation on the last day of 2007. Before that, the mill produced 1.8 million tons of iron every year, generating an annual revenue of 10 billion yuan.

This is not the only unit that has stopped production in Shougang. The steelmaker started cutting output since July 2005 after the State Council, China's cabinet, approved the plan to relocate its production facilities to Caofeidian in neighboring Hebei province.

Shougang's Beijing plant has slashed monthly production to 200,000 tons since July, says the group's chairman, Zhu Jimin. "This is about 29 percent of our normal output."

This plant, which formerly produced 8.2 million tons of steel a year, will almost halve its output this year to 4.2 million tons, before all production in Beijing is stopped by 2010.

Shougang's efforts have paid off: In the first half of 2008, the emission of sulfur dioxide, soot and dust fell 44.5 percent, 41.7 percent and 39.2 percent respectively, compared with the same period last year.

"We are proud that we have contributed to Beijing's blue sky," says a contented Zhu.

Shougang has made tremendous efforts, and even sacrificed its profits, for a greener Beijing. The steelmaker was hailed as a flagship during the reform of State-owned enterprises (SOEs) after the country embraced the opening-up and reform policy in 1979.

With more autonomy, the company accumulated huge profits in a short time. Shougang's production capacity more than quadrupled from 1.79 million tons in 1978 to 8.24 million tons in 1994. That year, it became the largest steelmaker in the country.

"At that time, workers in Shougang were so proud of their job," recalls a veteran spokesman of the company.

Apart from contributing about 2 billion yuan to Beijing's economic development every year, Shougang also played an important role in the capital's spread.

Shijingshan area, which used to be a part of Beijing's outer suburbs of Mentougou, became a district itself with Shougang's growth.

In the 1980s, Shougang provided winter heating for Beijingers living to the west of the present-day Chinese Military Museum with its coke-oven gases, according to Wei Zhixing, a veteran worker at the group.

But Shougang's rapid growth began to arouse concerns over its environmental impact as the smoke discharged from its chimneys contained dust and sulfur dioxide, two major pollutants emitted by steel mills.

"In the 1980s, people living near the plant started to complain about their clothes getting dirty from the black soot when hung out to dry," Wan Zhen, an environmental protection staff member at Shougang, says.

Others blamed Shougang for the erosion of the stone lions on the Marco Polo Bridge, aka the Lugou Bridge - because it piled steel residues about 1 km from the bridge, says the spokesman.

It was not until the mid-1990s that environmentalists and city planners first imposed restrictions on Shougang's expansion of its Beijing plant, arguing that it was a choice between keeping the capital or keeping the steel capital (that's what Shougang means in Chinese).

"Beijing is surrounded by mountain ranges to the west, north and east. The geographical condition is not suitable for the dispersion of pollutants. Shougang's plants are located in the west. The northwest wind in autumn and winter tends to bring the pollutants to the city center, where they stay," says Tian Gang, deputy director of Beijing Research Academy of Environmental Sciences.

On the other hand, Beijing is not an ideal spot for developing iron and steel industry, because it lacks both coal and iron ore. Moreover, it is difficult for Beijing, a city with scarce water resources, to satisfy Shougang's mighty thirst for water, according to Liu Xiaoshi, former director of the Beijing municipal planning commission.

Even though Shougang invested more than 200 million yuan every year on environmental protection measures since 1995, all its plans to expand production at the Beijing plant were rejected.

As a result, the group's output remained at around 8 million tons a year between 1995 and 2005. But during this period, Shougang's rivals, such as Baosteel in Shanghai and Wuhan Iron and Steel Group, underwent rapid growth and replaced it as the industry leader.

"So Shougang Group has long been mulling over an expansion plan outside Beijing, not only out of concern for the environment but also for its own sake," the spokesman says.

When Shougang decided to move out of Beijing, many port cities, including some from South China, invited the group, according to the spokesman. But the final choice was Caofeidian, an islet turned into a booming economic development zone in Tangshan, Hebei province.

Moving an 8-million-ton steel complex 220 km away was an unprecedented understaking. "It's more like starting a new plant rather than moving an old one," says the spokesman.

Like Chairman Zhu Jimin, most of the staff in Shougang see the relocation as an opportunity for the steelmaker to upgrade its technology and optimize the product mix.

With a total investment of 67.7 billion yuan, Shougang has launched Shougang Jingtang Iron and Steel Corporation (SJISC) with Tangshan Iron and Steel Group. The first phase of the new project, scheduled to start operation on Oct 18, is projected to produce 4.85 million tons of steel.

The corporation is expected to make 9.7 million tons of steel, 8.98 million tons of iron and 9.13 million tons of steel products per year when the project is finished by 2010.

"The 5,500 cu m blast furnace, the largest in China, will adopt state-of-the-art technologies to ensure the lowest level of emissions so that the pollution is not merely transferred (from Beijing) to Tangshan," says Qiang Wei, vice-general manager of SJISC.

An evaluation by the country's environment watchdog shows the new plant will ensure 99.5 percent of the solid waste and 97.5 percent of wastewater are recycled.

Caofeidian, located offshore to the south of Tangshan, was a belt-like alluvial isle formed more than 5,000 years ago. Hebei provincial government started the largest land-reclaiming project ever in China in the early 1990s, aiming to turn the natural harbor into a deepwater port.

According to geological surveys, 500 m offshore, the depth of the water could reach 25 m while the trough in front of the island, the lowest point of the Bohai Sea, could be as deep as 36 m, allowing for the construction of a 300,000-ton terminal without the need to dredge a channel.

The rich port resources will help cut logistics costs remarkably, as SJISC, the new joint venture, will have its own terminal for finished products.

"The terminal for finished products is located only about 500 m from our cold rolling mill," says Yang Chunhua, director of the transportation department at SJISC, "and the terminals for iron ore are not far away. It will help save at least 170 yuan in logistics costs on every ton of steel produced."

The spokesman refuses to reveal the joint venture's long-term plan as the company is focusing on the relocation and construction of the new furnace.

But there is still some 20 sq km of vacant space around it - enough for the rebirth of a world-class steelmaker with the capacity to satisfy the huge demand resulting from North China's rapid urbanization.