Shares of China Mining Company Zijin Plummet Following Toxic Spill Concerns

Mainland mining company Zijin saw its share price dive 12 percent yesterday, in reaction to the news that it was facing substantial compensation claims and production delays due to a toxic chemical spill into a major waterway, reports the

South China Morning Post.

 

The nation's largest gold producer, based in Xiamen, Fujian, announced on Monday that pollutants had escaped from a pond in its Zijinshan copper mine on 3 July. Prolonged heavy rain was to blame, causing a leak of acidic copper-containing waste water into the Ting river. Zijin said that 9,100 cubic metres of waste water had seeped into the river before the leak was contained on July 4.

 

Dead fish were found downstream, and the incident was expected to have a "substantial effect" on the mine's copper production, said Zijin.

 

Spokesman Zheng Yuqiang said, "If we are found to be responsible for the incident, we will bear responsibility," but that he did not know of any proposals to compensate the fishing industry.

 

In response to the delayed report of the incident while the company’s shares remained trading and investors were not informed of the price-sensitive information, Zheng commented, "We did not want to cause chaos in society while the impact of the leakage was not clear."

 

Government compensation for the affected fish industry could amount to 22.68 million yuan, according to an estimate by Xinhua news agency.

 

Credit Suisse estimated in its research report that each month of output disruption at the mine would decrease Zinjian’s copper production by 1.7 percent, while the company’s net profit was expected to be reduced by 0.9 per cent.

 

Yesterday, the company’s shares closed at 12.2 percent lower, trading at HKD4.90

 

Following this incident, analysts are expecting the Chinese government to further tighten prevention measures for industrial pollution by mining firms.

 

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