China’s largest steelmaker Baosteel Group has obtained approval to build a high-grade carbon steel project in the southern province of Guangdong.

Reuters reports that the company’s Hu Xuefa, head of the energy department of Shanghai-listed Baoshan Iron & Steel Co, said Baosteel aims to produce more high-grade steel products while seeking more overseas resources to handle rising raw material costs.

Hu said China's expansion of crude steel capacity in past years had tightened iron ore supply and also driven up prices.

The plan for more high-end products, such as automotive steel, follows Beijing's call to restructure the country's excessive steel capacity and restrict exports of low-end products, like rebar.

Baosteel has said it aims to expand the Zhanjiang project to 10Mt/y as part of its efforts to boost high-end steel products.

Baosteel plans to produce 50Mt of crude steel by 2012