(BEIJING, Jan. 28) -- The Beijing municipal government fully supports Shougang Steel Group's effort to reduce production capacity by 4 million tons this year and its relocation to Hebei Province, said a municipal government official.

The company's move is in conformity with the interests of the great majority of the people and is a good thing for Beijing, said Wang Haiping, vice director of Beijing Municipal Development and Reform Commission.

The government's supportive measures include the assistance in resolving such issues as social security, reemployment and development of new industries at Shougang's original site, he told reporters covering the current session of the Municipal People's Congress on Saturday.

Zhu Jimin, chairman of the board of directors of the company, said the planned schedule requires Shougang to cut down on its capacity by 4 million tons by the end of 2007. However, the operation of No 5 blast furnace and No 2 coking oven was already halted last year, "which shows our seriousness about environmental protection."

Shougang has managed to lower its energy consumption to the current level of 0.715 tons of coal equivalent per ton of steel from 0.8 tons of coal equivalent five years ago, said Zhu, adding that the goal for the relocated plant is 0.679 tons of coal equivalent.

A flagship enterprise of China's iron and steel industry, Shougang has long been blamed for air pollution in the capital city. In 2005 it decided to phase out its smelting operations by 2010 and move to Caofeidian to form a joint venture with Tangshan Iron and Steel Corp.