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1. Project Summary and Relationship to China's Agenda 21

Changchun General Steel Works is preparing to set up a new steel plant in Xinglongshan in the north-east of Changchun, where the former casting centre of Capital Steel and Iron Company was located. The new steelworks will consist of an electric furnace workshop, a continuous rolling workshop, and various kinds of auxiliary workshops and facilities. The plant will adopt a 1990's world-advanced short process steel smelting technology and produce 300,000 tons of steel per year. This project covers an area of 1.3 million m2 and a production construction area of 55,476 m2.

This project is based on programme areas 12B, 13B and 13C of China's Agenda 21, and is related to programme area 18A.

2. Background

The iron and steel industry emits enormous amounts of smoke and dust which contain ferric oxide, sulphur dioxide, carbon monoxide and carbon dioxide. These green house gases and toxic gases threaten human health and the growth of animals and plants. Therefore, the Chinese government has set strict air quality standards to control the emission of dust and pernicious gases. In addition, the environmental protection department has stipulated different measurement indices and pollution control standards. However, because production technology is from the 60's and 70's level, enterprises have faced difficulties in meeting the established standards. Therefore, the introduction of cleaner production technology, which can reduce adverse impacts to the environment, is of great significance for controlling air pollution in China, especially pollution by the steel and iron industry.

Since the production technology and equipment are obsolete, the Steel Smelting Plant of Changchun General Steel Works fails to meet the environmental standards. The factory emits 3.2 x 106 m3 of smoke and 884 tons of dust annually. Moreover, the noise near the workshop is as high as to 102 dB. Because the Steel Smelting Plant is located in an urban area, the pollution has seriously affected local residents. The Jilin Provincial Government, the Changchun Municipal Government and the Ministry of Metallurgy have all paid great attention to this problem and have set a deadline for the plant to meet the environmental standards. Technological innovation of the Steel Smelting Plant has been classified as one of Changchun's eight key pollution treatment projects. The relocation and transformation plan of the Steel Smelting Factory has been listed in the Ninth Five-Year Plan for Jilin's economic and social development .

Changchun General Steel Works is a medium sized intermediate steel and iron enterprise. There are more than one hundred enterprises of this kind in China. The project will construct a new demonstrating plant which will introduce foreign advanced technology and equipment for clean production. The plant will become an important model for other small-intermediate size iron and steel plants.

The Changchun General Steelworks is the biggest steel and iron enterprise in the Changchun city, which produces 120 thousand tons of steel and 100 thousand tons of rolled steel per year. This is short of meeting the needs of Changchun's steel market, which is 400 thousand tons annually. As a result, speeding up the technical renovation, adopting advanced technology and equipment, and increasing the productivity of Changchun iron and steel industry are urgent and necessary. Furthermore, Changchun is an important production base of the Chinese motor and machine tool industries. Various kinds of steels for motor vehicles produced by Changchun General Steelworks can directly serve the First Automobile Works. Therefore, the Changchun Municipal Government has decided to relocate the Changchun General Steelworks and has already chosen the new factory site and completed a pre-feasibility study. The project is also listed in the Ninth Five-Year Plan. Under the leadership of the local government, the Changchun General Steelworks is preparing for the relocation. Other agencies involved are the Changchun Planning Commission, the Environmental Protection Bureau, the Changchun Metallurgy Bureau and the Ministry of Metallurgy.

3. Objectives

3.1 Long-term Objective

This project seeks to introduce cleaner production in the iron and steel industry through technical innovation and the introduction of advanced steel smelting equipment and production technology. Cleaner production will reduce pollution by smoke, dust, toxic gas, wastewater, and noise. The project also plans to set-up a cleaner production model of steel smelting for other small-intermediate size iron and steel plants.

3.2 Immediate Objectives

• To construct a new steel smelting factory having modern equipment, advanced technology, high productivity, good product quality, new varieties of products which create little pollution;
• To reduce 75% of smoke emission with dust content less than 100 mg/m3, and the noise level below 80 dB. This will significantly improve the environmental quality and will provide valuable experience to the metallurgy industry.

4. Outputs and Activities

4.1 Establish plans for dismantling the old factory and constructing a new factory

• To decide on the equipment to be removed and work out an equipment dismantling schedule. The item will also set up a safe treatment plan for waste residue, furnace ashes and solid wastes;
• To formulate an implementation plan for the construction of the new steelworks.

Monitoring Indicators: Develop a plan for dismantling the existing factory and constructing the new factory

Implementing Agencies: Changchun Environmental Protection Bureau, Changchun General Steelworks and the Ministry of Metallurgy.

Time Schedule: January 1997 - December 1997

4.2 Environmental impact assessment, and technical and economical feasibility study of the new factory

• To evaluate the amount of total waste emission of the new factory and environmental situation after its construction;
• To evaluate the technical plan and introduce the equipment for the new steelworks;
• To create a product plan according to market need;
• To evaluate the future financial and economic conditions in the new factory.

Monitoring Indicator: Feasibility study

Implementing Agencies: Changchun General Steelworks, the Ministry of Metallurgy.

Time Schedule: January 1997 - December 1997

4.3 Feasibility study for financing the new plant and investment promotion activities

• To estimate the capital needed for the new factory;
• To explore support from foreign investors, donors and banks;
• To determine the condition and motive of domestic and foreign investors.

Monitoring Indicator: Determination of international aid and co-operating agencies

Implementing Agencies: Changchun General Steelworks, the Ministry of Metallurgy.

Time Schedule: March 1997 - March 1998

4.4 The importation, installation and commissioning of clean production equipment and technology for the new steelworks.

• To introduce one 75T ultrahigh power DC ore furnace, one 80 LF ladle finer, a set of R7-4 square billet continuous casting machines and a set of continuous rolling machines;
• To introduce technical materials on clean steel smelting, including drawings and standards; invite foreign experts for consultation;
• To send technical personnel from steelworks to take part in the training of new technology and equipment organised by the exporting companies;
• To install and commission imported equipment.

Monitoring Indicators: 75T ultra-high power DC arc furnace, 80 LF ladle finer and R7-4 square billet continuous casting machine and continuous rolling machine in the test run state.

Implementing Agencies: Changchun General Steelworks, the Ministry of Metallurgy.

Time Schedule: January 1998 - March 1999

4.5 Capacity building and demonstration

• To organise technical exchange among domestic and foreign personnel and to organise of study and inspection of advanced technology and equipment abroad;
• To formulate a promotion plan for cleaner production technology;
• To organise a conference on small-intermediate steelworks technology and finance.

Monitoring Indicators: Train 100 technical and management personnel for Changchun General Steelworks; promote this technology to 5-10 similar steelworks.

Implementing Agencies: The Ministry of Metallurgy, Changchun General Steelworks and other relevant organisations.

Time Schedule: January 1997 - December 1999

5. Inputs

5.1 Chinese Inputs

Domestic input will be mainly used for the equipment input of the new steelworks and the earlier stage preparation work and capacity construction of the project.

5.2 International Inputs

International input will be mainly in the form of loan and direct investment (or joint venture), which will be used for the introduction, installation and commissioning of foreign equipment and technology; the grant will be mainly used for a feasibility study and planning the project implementation.

5.3 Budget

The implementation of this project requires US$ 61.7 millions (not including unforeseen expenses, reserve fund for price increase, and loan interest). Domestic capital input is US$ 25.7 millions. foreign capital input is US$ 36 millions.

Table 1. Budget by Item (in million US dollars)

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Table 2. Budget by Output (in million US dollars)

6. Benefits

After the project is completed, the air quality in Changchun city will be clearly improved. The emission of smoke, dust and suspended solids from the steel smelting factory will be reduced by 75%. The residents and schools near the original steelworks will be relieved of the pollution problem. The annual sales income of the new steelworks will reach RMB 1.015 billion yuan with a profit of 198.65 million yuan.

7. Risks

The main problem faced by the project is the shortage of capital. Therefore, the implementing agencies should raise RMB 47 million yuan through government grants and local contributions. Meanwhile, the agencies should promote the investment opportunity to the international community, so they can obtain international aid, bank loans and co-operation with foreign enterprises.

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