Shougang Iron and Steel Group expects its annual steel output to reach 30 million tonnes by 2012,two years after its Beijing facilities are to be shut down, the group's chairman said Wednesday.

Shougang, meaning "Capital Steel", was Beijing's biggest polluter before it began cutting output at its Beijing plants for last year's Olympics. It is now moving production to a 10-million-tonne, state-of-the-art mill on the nearby coast of Hebei Province.

The 21-square-kilometer new plant in Caofeidian, an islet 220 km east of Beijing, will replace Shougang's old facilities in Beijing next year, to become the country's largest steel production base.

"The new plant will produce 9.7 million tonnes by the end of next year," said Chairman Zhu Jimin at a Beijing assembly commemorating the group's 90th founding anniversary.

He said the group would further expand production by launching new projects as well as merging and acquiring smaller plants in different provinces.

In its latest expansion plan, Shougang last month acquired 90 percent of the equities of Changzhi Iron & Steel Co., Ltd., a 3.6-million-tonne plant in the northern Shanxi Province.

"By 2012, we'll be producing 30 million tonnes of steel a year," said Zhu.

Meanwhile, the Beijing factory site will become a development zone for a wide range of industries including logistic services, real estate development and auto spares production, which will yield an additional 100 billion yuan (14.7 billion U.S. dollars) a year, he said.

Founded in 1919, Shougang is widely considered the flagship of China's heavy industry. With its production base just 17 km west of Tiananmen Square in central Beijing, however, it has long been blamed for causing heavy pollution as the plant's chimneys belch out thick clouds of smoke.

Its Beijing plant produced more than 12 million tonnes of steel annually before it was forced to cut output and pollution in 2007.

Last year, the plant said it cut output and pollution by 70 percent to ensure better air quality for the Beijing Olympics.