Alderon Iron Ore Corp. (AXXDF)

[LGL8054]

By David Stanway

Feb 26 (Reuters) - A vow by China to ban new steel projects until 2017 will help to relieve oversupply in the bloated sector but the policy will take time to have an effect, China's top steel maker said on Wednesday.

New steel capacity addition in China is still exceeding the tonnage due to be shut this year, Wang Jiguang, director of Hebei Iron and Steel Group's sales unit, told a Metal Bulletin conference in Beijing.

Overcapacity has dogged China's steel sector for years, wasting resources and causing big losses at heavily indebted mills, forcing them to rely on government subsidies.

Beijing has vowed to tackle the problem and said last week that it will ban new projects in industries such as steel and cement until 2017, while gradually eliminating existing operations that are below-standard.

"The government has put new capacity construction under strict controls and from now on the amount of additional capacity will be very small," Wang said.