UPDATE: Zijin Mining 1H Net Pft Up 40%,To Cut 2H Gold Production

Aug 09, 2010, SHANGHAI (Dow Jones)--Zijin Mining Group Co. (2899.HK), China's biggest gold producer by output, said Monday its first-half net profit rose 40% because of higher product prices.

Net profit for the six months ended June 30 rose to CNY2.7 billion ($398.9 million) from CNY1.9 billion. Revenue rose 40% to CNY13.5 billion from CNY9.6 billion.

The company said it will cut its gold production plan to 30 tons from 31.1 tons in the second half after a major toxic chemical leak at its copper plant in Shanghang County, Fujian province.

Heavy rainfall caused a rapid rise in the underground water level and damaged the waterproofing layer at the bottom of the plant's waste water pond, leading to a leakage of acidic copper and sulfate killing tons of fish in the nearby Ting River in July.

The company, which also produces copper, didn't recommend a first-half dividend. It omitted a first-half dividend last year.

Zijin also said it expects gold prices to face some pressure in the second half.

China's demand for gold has been growing rapidly as Chinese consumers' spending power has risen along with the country's booming economy. China is the world's largest gold producer and the second-largest consumer after India.

Zijin is a Hong Kong- and Shanghai-listed company, which is based in Fujian.