On January 28, Chongqing-based Chinese steelmaker Chongqing Iron and Steel Co. announced an estimated net profit of RMB 100 million ($16 million) for 2012, compared to a net loss of RMB 1.471 billion ($234 million) in 2011.

Chongqing Steel stated that its net profit in 2012 resulted from reductions in production costs, adjustment of product structure and sales of logistics assets, and in particular from financial subsidies worth RMB 2 billion ($318 million) received from local government.

On December 19 last year, Chongqing Steel Co. received financial subsidies worth RMB 500 million ($79 million) from the Bureau of Finance of the district of Changshou in Chongqing. On December 24, the steelmaker received a further RMB 1.5 billion ($239 million) in subsidies from the Bureau of Finance of the city of Chongqing.

The subsidies in question compensated the steel producer for increased costs due to its relocation for environment protection purposes.