The project plans to phase out obsolete capacity in Guangdong province.

The company produces mainly middle to high-end products used to manufacture automobiles, home appliances and machinery.

Baosteel Zhanjiang targets South China and Southeast Asian markets. The demand for steel in the Pearl River Delta area of Guangdong is expected to expand and a steel mill is needed to meet the demand in South China.

Transport costs take up an increasing share of total costs amid intensifying competition in the steel industry. The iron ore used by Baosteel Zhanjiang comes from Australia and Brazil. The deep-water port in Zhanjiang helps cut the logistics distance by 1,000 km for both raw materials and finished products.

For every 1 yuan invested by Baosteel Zhanjiang in the city, at least 15 yuan is expected to go to related sectors including equipment maintenance, material supplies and port-related services. The accommodation, catering and tourism sectors are also expected to benefit.

The complex is designed to lead China's steel industry in minimizing pollutant discharge per ton of steel produced, and maximizing environmental investment per ton of steel, recycling efficiency, real-time environmental monitoring facilities and clean production standards.