The Beijing Capital Iron and Steel Group has begun construction of its new steel plant in Caofeidian, a port city 220 kilometers east of the capital. The new factory will replace the old facilities in Beijing by 2010 to become the country's largest steel production base.

The Beijing Capital Iron and Steel Group has a production capacity of 13 million tons a year in Beijing, its current home base. Directed by the government's plan to improve competition in the country's iron and steel industry, the steel giant has started building a new production base in Caofeidian. The new plant will be put into operation in 2008.

Vice-Chairman of the National Development and Reform Commission Zhang Guobao says when the plant is complete transportation costs will be greatly reduced, while the supply of raw materials will be guaranteed.

"The new project is of great importance in upgrading China's iron and steel industry, as well as the merge-and-acquisition campaign."

With an investment of 67 billion yuan, or nearly 9 billion U.S. dollars, the new company has a designed annual production capacity of 27 million tons of iron, steel and rolled steel.

Meanwhile, according to the group's president, Zhu Jimin, the new plant will adopt new technologies to minimize emissions and waste discharge. An evaluation by the State Environmental Protection Administration shows the new plant will ensure 99.5 percent of its solid waste and 97.5 percent of waste water are recycled.

"Featuring advanced equipment and technology, efficient management and environmental friendliness, the new plant will be an internationally advanced one."

In addition, Zhu Jimin adds the old facilities in Beijing will "maintain minimum operations" during the 2008 Olympic Games, cutting its output by 4 million tons.