Maanshan Iron & Steel, the mainland's second-biggest Hong Kong-listed steelmaker, said it planned to move to its home base the iron and steel-making capacity of a 71 per cent-owned unit, at a possible investment of 19 billion yuan.
The relocation of three million tonnes of annual capacity to Maanshan city, Anhui, from nearby Hefei, will shift the highly polluting industry from the provincial capital, and better concentrate production in areas where there is demand, said chairman Gu Jianguo.
Mr Gu said Hefei would be developed into a downstream steel processing base focused on producing high-value added products, such as cold-rolled and galvanised sheets.
Annual capacity has been targeted at 1.7 million to 1.8 million tonnes, some of which may feed the city's electrical appliances manufacturers and carmakers.
The move is expected to begin in the second half of next year at the earliest, since it still needs the approval of the National Development and Reform Commission, according to Mr Gu.
Maanshan Steel bought the majority stake in the unit, Magang (Hefei) Iron & Steel, formerly Hefei Iron & Steel, for 355 million yuan in May last year.