Jul 30, 2010 10:50 PM

A River Runs Red in Fujian

It came from blue-green algae, local government officials told Ting River fishermen who brought in their sick and dying fish to explain a massive fish kill in June. But the fishermen did not believe them. With economic development set to continue at a throttling pace, China's pollution problems loom gargantuan. Unwinding Zijin Mining's recent spill has shown how more than a decade of accidents and cover-ups at one company has contributed to the toxic landscapes across China.

Fishing villages along the banks of the Ting River downstream from the mine watched the color of the river's water turn from light-green to dark-green. And then the fish began dying. The Shanghang County Government and Environmental Protection Bureau told villagers that it had been caused by a severe outbreak of blue-green algae produced from a downpour. Ten days later, the Ting River once again changed color, and more fish began to die off.

Permissive attitudes toward pollution from small- and medium enterprises were once the norm. But the flagrant environmental violations of a large, listed company like Zijin Mining may have finally worn the public's patience down to a critical line. Zijin Mining is China's largest gold producer and second largest copper producer, ranking in the world's top 500 companies. Domestic companies have been repeatedly barred from developing new overseas gold resources. For Zijin Mining, this meant that local copper reserves became an increasingly important source of profit. According to Zijin Mining's 2009 annual report, revenues from the company's copper business accounted for 10.75 percent of operating revenue and 21.52 percent of net profit.

Prior to the public reprimands, official actions were easily ignored. In May, the Ministry of Environmental Protection (MEP) conducted environmental checks on a list of Shanghai Stock Exchange-listed companies, calling 11 of them out by name for serious environmental problems. Zijin Mining ranked top on the list of violators, and seven of its subsidiary companies were found to have environmental violations. But the MEP report was a mere warning, one of many that had been swished away by the mining company, and did not come with any penalties.

In 1999, floodwaters burst open a dam used by Zijin Mining to block waste slag. The sodium cyanide residue gushed downstream and destroyed several acres of crops. After the incident, Zijin Mining was ordered to increase building standards for the dam. Local villagers were relocated with assistance from the local government.

Just one year later, Zijin Mining was involved in another major accident. A company-owned truck carrying 10 tons of sodium cyanide tumbled down and leaked at the base of Zijin Mountain, causing 102 people to be poisoned. Many Shanghang County residents now only drink bottled-water.

On the evening of July 15, the Shanghang County government in Fujian Province convened a press conference to release the results of the latest Zijin Mining pollution incident – three higher-ups at a Zijin Mining factory had been detained on criminal charges and the director of the county Environmental Protection Bureau had resigned. A massive leak involving 500 cubic meters of wastewater that occurred twelve days earlier turned the river's water crimson red and killed off nearly 1,900 tons of fish. The company waited nine days to make the incident public.

The leakage came from China's first 10,000-ton copper smelting plant owned by Zijin Mining. Smelting uses chemicals to extract metals from ore and produces a large amount of acidic wastewater.

Piles of dead fish were bought off from the villagers for 12 yuan per kilogram and destroyed. Villagers said they didn't know who was purchasing the fish, but others identified the buyers as workers from the Zijinshan Copper Mine smelting plant.

The local government said 20 million yuan was given to fisherman for the hundreds of tons of dead fish.

The joint investigation team identified three major causes of the accident: a rupture in the wastewater's pool lining lead directly to leakage; the No. 6 seepage observation well and the drainage tunnel had been illegally opened; and the incident had not been discovered in part due to damaged monitoring equipment. Numerous problems in various facilities at the mine were also discovered. The bottom of the lining sheets at the mine's dump leaching pool, extraction pool, anti-flood pool and wastewater pool had not been hardened, and the impermeable membranes were then subject to uneven pressures, leading to tears in the lining.

The Zijinshan Copper Mine is one of Zijin Mining's core companies. The China Securities Regulatory Commission opened an investigation into the Shanghai and Hong Kong Stock Markets-listed Zijin Mining over a possible breach of disclosure rules. The Hong Kong Securities and Futures Commission followed suit in a public statement on the matter. Several executives have been detained by the local public security bureau on criminal charges.

One source said that the nine-day delay in Zijin Mining's disclosure of the wastewater leakage incident was a serious violation of Chinese securities law and that the company could face the most severe punishment it has ever had to withstand.

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