Date: Mar 30, 2018

The nation’s efforts to reduce overcapacity in the steel industry will benefit global mining giant Rio Tinto Group Plc and others, rather than hurt their business interests, according to its CEO Jean-Sebastien Jacques.

The industry is undergoing restructuring in the country but the reduction in capacity does not mean a reduction in production, he said.

High quality raw materials are still necessary as the move entails a shift to high quality steel and shutting down of the smaller and more polluting blast furnaces while switching to the newest, largest blast furnaces, he added.

China has been witnessing massive overcapacity in its iron and steel sector and has vowed to reduce capacity. It plans to eliminate 100 million tons to 150 million tons of crude steel capacity in the five years from 2016. In 2017 alone, the country slashed its crude steel production capacity by more than 50 million tons, exceeding its annual target, as part of efforts to improve the competitiveness of the bloated sector.

The country also phased out the production of 140 million tons of low-quality steel made from scrap metal last year.

The industry’s profitability has substantially improved, with major steel producers’ profits surging 613.6 percent, according to data from the China Iron and Steel Association.

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