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Zijin Waste Spill Spreads to Second Province, Threatens Fish
Jul 20,2010 15:38CST
industry news

July 20 (Bloomberg) -- Acidic waste leaking from Zijin Mining Group Co.'s biggest copper plant may have spread to a another Chinese province from Fujian, threatening more fisheries in the Ting river.

The Fujian environmental agency is posting daily reports to Guangdong regarding the water quality after the province informed it of elevated copper content in the river, an official at the agency who only wanted to be identified as Zheng said by phone today.

Zijin Mining tumbled 17 percent in Hong Kong trading last week after saying July 12 that 2.4 million gallons of acidic copper waste spilled from its Zijinshan mine, poisoning enough fish to feed 72,000 residents for a year. Police detained three Zijin managers, and the securities regulator is probing the company over its disclosure of the incident.

"The Ting river runs into Guangdong, and it isn't a surprise that the toxic spill would spread there," said Heng Kun, an analyst at Essence Securities Co. "The concern is how much the government fine will be and when the contamination scandal for Zijin will come to an end."

China has faced a series of health and environmental standard failures, with melamine-tainted milk and waste from smelters killing children. An explosion on July 16 in the northeastern city of Dalian led to an oil spill covering more than 60 square kilometers (23 square miles). It may take five days to clear the spill, the Dalian municipal government said.

Zijin rose 10 percent, the daily limit, in Shanghai trading to 5.73 yuan at 1:17 p.m. local time. In Hong Kong, the shares rose 5.8 percent, the first gain in four days, to HK$4.73. The benchmark Hang Seng Index gained 1.4 percent.

Shares Rebound

The shares are rebounding after some investors bet last week's decline was overdone, having depressed the company's price-to-earnings ratio below rivals, said Wu Kan, a Shanghai- based fund manager at Dazhong Insurance Co.

The Fujian government has three teams which will investigate the Zijin incident, monitor the water quality 24 hours a day, and be ready to handle emergencies, Zheng said. The government will also investigate pollution of all companies in the province, he said.

Zijin will contact the environmental agencies in the Fujian and Guangdong regarding the widening spill, company spokesman Zhao Jugang said by phone today.

Excess Discharge

The July 3 spill came after the same mine was cited for excess waste discharge last September, a problem Zijin didn't fix, the Shanghang county government said July 15. Zijin initially blamed heavy rains for the leak near Shanghang, where about half a million people live.

There was another leak on the 16th, with 500 cubic meters of waste water discharged, the company said on its website.

Zijin's board of directors expresses "its deep regret regarding the incident and the improper handling of information disclosure by the company, for causing substantial losses to the fish farmers located at the reservoir downstream of the mine and having a harmful impact on society," the company said yesterday.

Zijin, China's sixth-largest copper producer, has shut its smelter during the investigation and doesn't know when it will reopen. Output at Zijinshan accounts for about 15 percent of Zijin's total production, according to Guotai Junan Securities Co. The mine also generates about 60 percent of its gold output.

As many as 38 Chinese officials will be penalized for dereliction of duty, the 21st Century Business Herald said today, citing an unidentified person.

Zijin's sales soared 68-fold in the past decade as China's gold industry became the world's largest producer of the commodity, overtaking South Africa in 2007. The company, the largest publicly traded Chinese bullion producer, operates in Peru, Mongolia, Canada and Myanmar, according to its website.

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