The project is expected to increase Shougang's annual silicon steel capacity by 350,000 tonnes, according to a company statement.

The company has also started the second phase of an oriented silicon steel project with capacity at 90,000 tonnes per year, and expects production to start in the first half of 2023, it said.

"The company's current high-grade non-oriented silicon steel and thin-gauge oriented silicon steel used for new energy vehicles can not meet the market demand," Shougang said, adding that it will continue to boost its capacity for such products according to market demand and orders.

Shougang is one of China's major producers for high-grade non-oriented silicon steel - typically used for the rotor and stator in NEV electric motors - along with the top listed steelmaker Baoshan Iron & Steel Co Ltd.

The company produced around 1.5 million tonnes of silicon steel in 2021 and anticipates its total production to reach 2-2.5 million tonnes by 2025, according to the statement.

(Reporting by Min Zhang and Dominique Patton;Editing by Elaine Hardcastle)