Tangshan Iron & Steel Group, China's second-biggest steelmaker by output, plans to boost capacity to 30 million tons a year by 2010, challenging rivals Baosteel Group Corp and Anben Steel Group.

Tangshan Iron will reach that capacity "in the next three to five years," Chairman Wang Tianyi said in a slide prepared for the 4th International Steel Congress in Beijing yesterday.

Current and already planned capacity was 20 million tons, he said.

The expansion will make the Hebei Province-based company the nation's third company capable of making more than 30 million tons a year.

China, whose 260 steelmakers supply a third of the world's steel, said last July it planned to shut smaller producers and force mergers to create two companies big enough to compete on world markets.

The two companies, which were not named, will each be capable of making more than 30 million tons a year by 2010, the National Development and Reform Commission, China's top planning agency, said.

Baosteel, the nation's biggest steelmaker, will boost its capacity to 50 million tons a year from the current 30 million tons, President Xu Lejiang said in a slide yesterday, confirming earlier statements.

Anshan Iron & Steel Group, which combined with Benxi Iron & Steel Group in August to form Anben Iron & Steel Group, aims to boost capacity to 30 million tons by 2010 from 18.4 million tons, Chairman Liu Jie said last month.

China has been trying to consolidate its steel industry after output doubled in four years, driving up prices of iron ore and coal to records and fuelling inflation.

Grouping mills into bigger steel businesses will help steelmakers to spend more on making high-grade products and to negotiate lower raw material costs.

China has also grouped its oil-and-gas industry around three large companies that are able to compete more effectively.

Tangshan Steel received regulatory approval last year to merge with smaller rivals Xuanhua Iron & Steel Group and Chengde Iron & Steel Group, which are both based in Hebei.

The move, which does not involve any cash payment, boosted Tangshan Steel's production 60 per cent to 16.1 million tons last year.

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