Zijin Mining To Slow Overseas Expansion; Focus On Environmental Standards

HONG KONG, Aug 10, 2010 (Dow Jones Commodities News via Comtex) -- Zijin Mining Group Co. (2899.HK) plans to slow its pace of overseas expansion as China's biggest gold producer focuses on strengthening safety and environmental standards after being blamed for a major toxic chemical leak at one of its copper plants in early July, company Chairman Chen Jinghe said Tuesday.

Zijin Mining has faced strong criticism from the government and the public in the wake of the Zijinshan Copper Mine accident, which resulted in the release of toxic contaminants into the Ting River in Fujian province, killing tons of fish and threatened the livelihood of the local fishing industry. The head of the mine has been detained by police pending the results of an investigation.

The company said earlier it would shut the Zijinshan copper facility for at least six months, and also limit gold production at its flagship Zijinshan gold mine to prevent further environmental risks.

Chen told Dow Jones Newswires the company will review its production methods and strengthen the environmental standards of its plants, adding it would take about a year for the Zijinshan copper facility to resume production following an upgrade of its facilities. Meanwhile, Chen said he expects the production limits to be lifted soon at the Zijinshan gold mine, the company's biggest gold mining facility.

"We might slow down the pace of expansion overseas at this stage as the incident has undermined the company's image as a socially responsible corporation," Chen said, without elaborating.

However, Chen said Zijin Mining would continue to "look for gold and copper acquisition opportunities overseas in the long run."

Chen said it was too early to estimate compensation costs in relation to the Zijinshan chemical leak.

Copper sales accounted for around 26% of the company's total revenue in the first half, while the halted copper plant produces about 10% of the company's total output.