Gloom for Hebei as steel loses shine(2)

By 2013, his company was deep in the red, reporting losses of at least 10 million yuan every month.

Kong himself was in charge when the company was forced to close down all its facilities, dismantle the furnace and put an end to its steel legend in 2013.

SACRIFICE

The central government has demanded China's steel output be cut by 80 million tonnes by the end of 2017. Hebei, as the largest producer, should cut production by 60 million tonnes.

The production cut would shake many related industries and affect the livelihoods of at least 600,000 people.

In Shucun Township of Wu'an City, a leading steel base, the past two years have seen the closure of 237 lime kilns, about 70 percent of the city's total.

Lime is a major ingredient in steelmaking, but lime kilns are heavy polluters.

Almost the entire Shucun Township was fed by limemaking. When kilns were bulldozed one after another, thousands of workers were left not knowing where they should go for a living.

The government, too, paid a price. Last year, Hebei Province posted a GDP growth of 6.5 percent, the third-lowest growth rate among all Chinese provinces.

By the end of 2017, production cuts in the steel sector will have reduced the province's tax revenue by 50 billion yuan.

SEEKING SURVIVAL

Ye Jinbao, founder of the first private steel plant in Qianan, evaded the steel industry's recession: he sold the plant in its heyday and tried his luck in biomedicine.

"It's still too early to tell if I've jumped from the frying pan into fire," said Ye, whose 400-million-yuan investment in vaccine and drug development has not yielded any profit. His first vaccine product, developed in 2006 and costing 20 million yuan, is still waiting for the clinical tests needed before it is approved for sale.

Though some plants have closed down altogether, the absolute majority of steelmakers are still clinging on, struggling to survive by upgrading their products and seeking new revenue streams.

Jinan Steel in Wu'an City has seen a ray of hope in teaming up with Fermat Machinery to produce digitally-controlled machine tools. But the city government's decision to move it and five other plants from downtown into a suburban industrial park by 2017 was a heavy blow.

Relocating is an expensive business for steel plants, as 90 percent of their facilities can not be moved and have to be rebuilt from scratch in the new location.

"I hope we can survive with financial and policy support from the city government," said Wei Kaozeng, a senior executive with Jinan Steel.

The industry's gloomy outlook has forced companies and governments to seek more sustained development.

"The city's iron ore reserves may last for another 50 years," said Li Zhong, Party chief in Qianan. "It's crucial to find more rational ways of development without exhausting our resources."

Powerful state companies are rapidly upgrading technologies to cut emissions.

The Tangshan steel plant of Hebei Steel and Iron Group, a 72-year-old state firm, has set up one of the largest sewage treatment facilities in north China and stopped using groundwater in its steel production.

The plant has also applied new technologies to cut other waste emissions and reduce noise.

"Survival calls for transformation and involves great pain," said Zhou Benshun, secretary of the Hebei Provincial Party Committee. "But there's no turning back and we have to forge ahead."