Companies

Zijin Mining shuts copper smelter after leakage

(Agencies)
Updated: 2010-07-13 11:05

Dead fish lie on the bank of the Tingjiang River in Shanghang county, Fujian province, the result of sewage leaking into the river since July 3 from the local Zijinshan Copper Mine. [Jiang Kehong / Xinhua]

Zijin Mining Group Co, China's largest gold producer, said it shut the copper smelter at its biggest mine after a leakage of acidic waste water killed fish. The shares fell to a 17-month low.

The plant, which produces 12,800 metric tons of copper a year, will only be reopened after checks by local environmental authorities, spokesman Zhao Jugang said by phone today in an interview. The company will likely have to pay a penalty and compensate local fisheries, he said.

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The leakage underscores the challenges China faces in seeking to impose higher environmental standards on commodity producers. Zijin in May said it took corrective measures on plants and mines after criticism from environmental protection agencies.

"We estimate for each month of production disruption, Zijin's?full-year?copper output of 2010 would be affected by 1.7 percent and earnings to be affected by 0.9 percent," Trina Chen, an analyst at Credit Suisse Group AG, wrote in a note today.

The shares, suspended yesterday for the announcement, dropped as much as 8 percent to 5.50 yuan (81 cents), the lowest level since February 2009. They traded down 5.4 percent to 5.66 yuan at 9:36 am in Shanghai trading.

The effect on drinking water is "limited" and the local water supply has normalized a few days after the incident, Zhao said from Shanhang city, Fujian province. The leakage occurred at Zijinshan mine.

Waste water containing copper and sulfate seeped into the Ting River in Fujian province on July 3, the company said in a filing to the Hong Kong exchange yesterday.