SHANGHAI, Dec. 8 (SMM) -- The Ministry of Industry and Information Technology (MIIT) released a statement on Wednesday that China may allow foreign companies to invest in domestic steel enterprises in order to improve the ability of Chinese enterprises.

The MIIT said that China should dare to attract top foreign steel enterprises to invest in domestic steel enterprises, attract them to participate in major projects, and must be willing to give the other party interests in order to rapidly improve the management and development capabilities of Chinese enterprises. In order to achieve the integration of scattered domestic steel industry, the MIIT requires Chinese steel enterprises and foreign companies to share interests in an effort to help develop China's steel market.

The MIIT said the joint venture of Wuhan Iron & Steel Co. (WISCO) and Nippon Steel Corp., the joint venture of Baosteel Group and ArcelorMittal, and the joint venture of Anshan Iron & Steel Group and ThyssenKrupp AG are successful precedents. China's iron ore demand may total 1.13 billion mt and coke demand may reach 380 million mt by the end of 2015.

The MIIT said China should support domestic steel enterprises to build steel mills foreign countries and to invest in foreign steel companies. China often complains about the lack of influence of iron ore, a key steelmaking raw material. Encouraging enterprises to build steel plants in foreign countries is a grand strategy of the development of steel industry during the 12th Five-Year Plan period, and improving the self-sufficiency rate of domestic iron ore resources is the second-level problem.

The MIIT also urged to accelerate the construction of steel production base in the southeast coastal areas, including Baosteel’s Zhanjiang base and WISCO’s Fangchenggang base. Steelease believes the MIIT’s decision suggests the Chinese government may soon relax the regulatory restrictions on these two projects. As the domestic steel industry is suffering from overcapacity, the National Development and Reform Commission currently no longer approves any new steel projects, which is the reason behind the fact that these two steel projects have been delayed for years.