Beijing encourages metal producers to merge

Beijing will encourage China’s non-ferrous metal producers to merge and close outdated facilities in an effort to modernize the industry, the South China Morning Post reported. The State Council plan issued on Monday would see the creation of between three and five large multimetal firms by 2011, at which point the top 10 non-ferrous metals firms will control 90% of China’s copper production, 70% of aluminum production and 60% of lead and zinc production. The State Council pledged to close 300,000 tons of outdated smelting capacity for copper, 600,000 tons for lead and 400,000 tons for zinc this year. Next year, it would cut 800,000 tons of aluminum capacity. It would also restrict new projects in the sector to control overcapacity. Analysts see the development as generally benefitting a severely fragmented industry in which 80% of suppliers have an annual capacity of less than 10,000 tons.