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Delong says China unit to be affected by steelmaking cuts
STEEL manufacturer Delong Holdings says that its subsidiary, Laiyuan County Aoyu Steel Co, Ltd (Aoyu Steel), may be affected by provincial plans to reduce the steelmaking capacity of the Hebei Province in China.
Aoyu Steel is located in Baoding, one of the cities affected by such plans.
The plans, announced at a meeting of Hebei Province's 12th National People Congress, are aimed at reducing the steelmaking capacity in Hebei by 31.86 million tonnes, and to accelerate the steelmaking capacity reduction efforts in the cities of Langfang, Baoding and Zhangjiakou, in the Hebei Province, this year.
Delong said it understands that the plans are aimed at reducing excess capacity in the steelmaking industry and the resulting impact on the environment.
"As Aoyu Steel employs approximately 2,300 employees for its production, any capacity reductions to Aoyu Steel may result in significant economic and social impact to the economy in Baoding . . . Based on current discussions between (Delong) and the relevant regulatory authorities in China, Aoyu Steel may be required to reduce its steelmaking output in view of the (said) plans, which may in turn adversely affect the financial position of the group," Delong's announcement said.
It added that it would continue to keep its shareholders updated on this matter.
Delong shares finished Wednesday unchanged at $0.30 a share.