Baosteel has received approval from the Chinese government to proceed with its plans to build an US$11 billion project at Zhanjiang port in Guangdong province.
The project includes a steel mill with production capacity of 10-million tonnes per year, power plants and port facilities.
The project is in line with the government's plan to move steelmaking facilities closer to the coast to cut production costs, according to international reports. China plans to move 40 percent of total steel capacity to the coast by 2015.
As part of Baosteel's agreement, the government will close more than 16 million tonnes of crude steel capacity in Guangdong. The government continues its efforts to force hundreds of smaller mills to close or consolidate to help reduce China's steel capacity glut. Baosteel is the third largest steel producer in China.