China plans to increase consolidation of its steel sector this year by closing small mills and improving production standards, the Ministry of Industry and Information Technology said on Tuesday.

The China Dailynewspaper reported that in a new policy document, the ministry reiterated China's pledge to eliminate mills that produced less than 1Mt/y of crude steel.

Manufacturers of higher end steel will have to produce more than 300kt/y to stay in business.

Li Yizhong, China's industry minister, told a meeting in Dalian that steel companies would have to conform to tougher standards and would also be forced to control overcapacity and shut down obsolete facilities.

Regulations on financing and land use will also be tweaked in order to encourage further consolidation in the sector, and mills will also be encouraged to travel wider in their search for takeover targets, according to a note issued by the ministry.

Li said the ministry would publish a list of companies that comply with new regulations ‘in order to provide an important basis’ for government departments and financial institutions as they push industry restructuring forward.

The ministry said last month that China would put 60% of its total steel capacity in the hands of its 10 largest steel mills by 2015, up from 44% at the end of last year.