China Widens Lead Industry Checks After Poisonings

HONG KONG, Sept. 2 -- China's Yunnan province is investigating possible lead poisoning in its capital city of Kunming, while smelter officials in its top lead producing city, Gejiu, are worried the provincial government may close local smelters with half a million tonnes of annual capacity.

    It would be the latest in a series of lead poisoning cases in China, where hundreds of children had been found to have high levels of lead in their blood. China is the world's top producer of lead, a heavy metal that can cause brain damage in children.

    Hunan, the second-biggest lead producing province in China, had shut some small lead smelters during last month's checks, a local environmental official said on Tuesday.

    He did not say how many smelters were closed and said environment officials were still checking smelters.

    Beijing, which had already set a target of closing 600,000 tonnes of outdated lead capacity nationwide in the next few years, plans to send an inspection group to major lead producing provinces for environment checks after hundreds of children were poisoned in Shaanxi and Hunan last month, industry sources said.

    The inspections could force local governments to close outdated smelters permanently, the sources said.

    A senior industry official said eight Chinese departments had discussed on the plan endorsed by China's cabinet, the State Council, and had not finalised the timeframe for the checks.

    Three plants in Henan with annual capacity of 240,000 tonnes and two plants in Shaanxi with capacity of nearly 100,000 tonnes have already been shut, idling 8 percent of the country's annual operating capacity.

    Analysts at Macquarie Bank, writing in a note to clients, said that in total over 32 Chinese lead smelting businesses with capacity of more than 400,000 tonnes could suspend production.

    Lead prices on the London Metal Exchange MPB3 have risen 12 percent since Aug. 24 when Henan closed the plants and nearly 110 percent so far this year to $2,103 a tonne on Tuesday.

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    "According to the general practice, we may conduct checks on all nonferrous metals smelters in the province," an official at Yunnan's environmental protection bureau, said, without providing a timeframe for the checks.

    Environmental officials in Yunnan, the fourth-biggest lead producing province in China, were investigating the lead poisoning site in Dongchuan district, home to aluminium and copper smelting facilities including those operated by Yunnan Copper (000878.SZ: Quote), he added.

    In Gejiu city, home of 50-60 tiny refined lead producers with some 500,000 tonnes of annual capacity in total, smelter officials are expecting the arrival of provincial environment officials and the possible closure orders.

    "We have heard they are coming. We don't know when," a senior executive at a lead smelter in Gejiu, said. "It is possible that the provincial government asks smelters to close."

    "If they want smelters to close, the whole city's plants may have to close given their outdated technology."

    He said roughly two-thirds of the city's capacity was operating now. That rate is about 8 percent of China's annual operating capacity based on July's output.

    (Source: Reuters)