Shougang Group, China's eighth largest steel maker, will expand its annual production capacity to 30 million tonnes by 2012 with new projects in Caofeidian and consolidation in other regions, reported Thursday's China Daily.

The company will start production at its new steel mill at the Bohai Bay island land reclamation economic development site on the northern Chinese coastline by the end of 2010, said the newspaper.

The mill will have an initial capacity of 9.7 million tonnes a year. Production will start after Shougang's Beijing factory shuts down next year, the newspaper said, citing the company's chairman Zhu Jimin.

The company is the parent of Shenzhen-listed Shougang Iron and Steel.

Zhu said the Caofeidian factory was still undergoing trials. The project is part of Shougang's efforts to shift its production facilities away from Beijing in an effort to reduce pollution in the capital and cut costs.

The new mill, which will mainly produce flat steel products such as cold-rolled coil used in auto-making and the home appliance sectors, is near iron ore ports.

The Beijing factory site will be used to develop a wide range of different industries including high-end material, high-end machinery, real estate development; auto spares production, tourism, and culture creativity. This will generate an additional 100 billion yuan (14.64 billion U.S. dollars) a year, according to Zhu.

Shougang aims to further boost its production capacity by launching new projects and acquiring smaller mills in other provinces and autonomous regions, including Guizhou, Shanxi, Xinjiang and Hebei to reach the desired annual capacity of 30 million tonnes by 2012.

The company produced 12 million tonnes of steel products last year.