Beijing orders new round of factory closures

PUBLISHED : Wednesday, 07 April, 2010, 12:00am
UPDATED : Wednesday, 07 April, 2010, 12:00am

The central government has issued a fresh edict to shut down outdated and inefficient plants in a dozen sectors as it seeks to raise industry competitiveness, cut pollution and conserve energy.

It is the third policy statement issued since October by the State Council calling on industries to speed up the elimination of old, energy-hungry and polluting plants to help relieve overcapacity that plagues many sectors.

In yesterday's statement, the government laid out clear plant-closure targets for the electricity, coal, coke, ferro-alloy, calcium carbide, steel, non-ferrous metal, construction materials, paper, ethanol, tannery and textiles sectors.

It has ordered the Ministry of Industry and Information Technology and the Energy Bureau to allocate regional closure targets.

To ensure the upgrading of industrial facilities, new projects will not be approved unless they meet tougher land use and work safety requirements and tighter limits on environmental impact.

Regional governments considering the construction of new plants to replace those being shut down have been told the new plants must be of the same capacity, or smaller than, those they are replacing.

Ensuring the orders are implemented has not been easy, as some local authorities, faced with unemployment and the desire to meet economic growth targets, have been reluctant to close plants.

However, this issue is partly mitigated by Beijing's move to also appraise local government officials on their environmental achievements.

Plants that are on the list to be shut down will be starved of bank credit and subject to higher energy prices. Those that remain in operation after a deadline for them to shut will see their emissions permits and business licences cancelled and their electricity supply cut off.

Some of the targets are aggressive compared with achievement in recent years. For example, the State Council has set a goal of closing small and inefficient power plants with a capacity to generate 50 gigawatts of electricity this year. This compares with the reduction in capacity of 60GW in the four years up to last year.

In the coal sector, 8,000 small mines that are unsafe, pollution-prone and inefficient are to be closed this year to reduce capacity by 200 million tonnes, about 6.7 per cent of the nation's total output last year.

In the steel sector, blast furnaces of less than 400 cubic metres in capacity and electric furnaces of less than 30 tonnes are to be closed by the end of next year. It did not give an estimate on the amount of capacity this entailed.

Waste not, want not

Beijing wants to see more efficient industries developed

Number of gigawatts of power plants to be closed under the new orders is: 50