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Jianlong Steel Holdings will double production capacity

23 May 2016

Jianlong Steel Holdings for a period of five years to double production capacity. This was announced by Zhang Zhixiang, who is chairman of the board of the company. Jianlong Steel Holdings ranks second among private sector leaders of metallurgical. After increasing production volumes of annual steel production will be 50 mln. Tons. Today, the company produces 23 million. Tons of steel products. Since early May, the beginning of its work steel company Shanxi Haixin. This plant was purchased by the company two years ago. After this bankrupt production remain inactive. The production capacity of Shanxi Haixin is 3 million. Tons of steel annually.

As stated by Zhang Zhixiang, this kind of action does not run counter to the Chinese government policy. The government of China said its intention to the scrapping of excess capacity in the amount of 150 mln. Tons. In this case the deadline for implementation of the 2020 draft. According to Zhang Zhixiang business is not going to be engaged in construction of new production facilities. They will expand in the acquisitions process. Chairman of the Board believes that the main problem of the metallurgical sector of China — its high fragmentation. Creating a certain number of mega-groups can solve the problem. There will be a high economies of scale on the one hand. On the other — this approach will allow for more effective control of the produced volume of production.

According to the head of the corporation Ansteel Tang Fuping in 2015 the share of the top ten leaders of the metallurgical sector had 34.2% of domestic production. However, the previously envisaged bringing the indicator to the level of 60% by the end of 2015. Zhang Zhixiang believes that the optimal level is 70%.

The Chinese government reported that this year and next metallurgical sector companies will reduce production of steel by 10%. This refers to those enterprises controlled by the central authorities of the country. It is supposed to simplify the management structure of state-owned companies. This step should reduce the level of bureaucracy. It is also expected to reduce costs of $ 100 billion. Yuan. Chinese Ministry of Finance confirmed the funding of activities that are associated with a stop overcapacity. investments amounted to $ 100 billion. yuan.

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