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Yahoo! My Yahoo! Mail More Yahoo! Services Account Options New User? Sign Up Sign In Help Yahoo! Search web search Home Singapore Asia Pacific World Business Entertainment Sports Technology Singapore Asia Pacific World Chinese miner goes from corporate star to villain By JOE McDONALD,AP Business Writer - Sunday, July 25 Send IM Story Print BEIJING – A month ago, Zijin Mining Group was a Chinese corporate star, a profitable gold and copper miner with ambitions to further expand abroad. Today, Zijin is an environmental villain to China's public after a July 3 leak of copper mine waste into a river killed fish, fouled drinking water for 60,000 people and flowed into a populous neighboring province. Zijin admits breaking rules and state media are questioning whether local officials ignored misconduct. The scandal highlights chronic complaints in China that politically favored companies are allowed to ignore safety rules, leading to deadly and damaging oil and chemical leaks, mine fires and other disasters. It has focused scrutiny on a major publicly traded Chinese company with assets in seven countries from Peru to South Africa and that is bidding to expand in Australia and Congo. Zijin boosted profits by slashing costs but skimped on investment, making such a disaster almost inevitable, said Liu Minda, an analyst for Huatai Securities. "They didn't spend money on things they should have," Liu said. "We are not surprised that they have environmental accidents." The disaster in Shanghang, a town on China's southeast coast in Fujian province, has received extensive coverage by state newspapers, possibly as a warning to other companies and local officials. "Like other polluters, Zijin has countless ties with the local government," complained an editorial in the Guangzhou Daily, a major newspaper in Guangdong province, downstream from the mine. "Zijin Mining is like a selfish, gold-hungry crocodile. It takes no responsibility for the local people's life and health." Also this week, an oil spill has coated beaches near the port of Dalian in the northeast after a pipeline owned by state-owned China National Petroleum Corp. blew up July 16. No cause has been announced. Frequent industrial disasters have prompted a public outcry over the costs of China's rapid development. Communist leaders promise improvements after each but accidents still are common. Local officials sometimes are reluctant to enforce regulations for fear of losing jobs and tax revenue. Since Zijin's waste spill, police have detained the facility's manager, deputy manager and environmental protection officer. The chief county environmental official resigned. Zijin publicly apologized and admitted a waste pond at its Zijinshan Copper Mine in Shanghang was improperly built and operated. "The executives of our company and I have been in great remorse," chairman Chen Jinghe said on Shanghang Television on Monday, according to the China Daily newspaper. "We're willing to shoulder all responsibilities and will not have any complaints." The company promised to pay more attention to the environment but said the accident will have no impact on the speed and scale of its foreign expansion plans. "This will not affect our company's overall development," said a company spokesman, Zou Yongming. The episode is an abrupt reversal for a corporate high-flier lauded by Forbes magazine last year as a candidate to enter its "Fab 50" list of Asia's top private companies with the best long-term prospects. Zijin started out as a company owned by Shanghang's government. It was turned into a corporation in 2000 and had an initial public offering in Hong Kong in 2003. Chen, the chairman, is credited with discovering its main asset, the Zijinshan _ or Purple Gold Mountain _ gold and copper mine as a young engineer in the 1980s. Zijin says the mine has China's largest usable gold reserves. Today, Zijin says it is China's top gold producer, No. 3 in copper and among the top six in zinc. Abroad, it also owns stakes in mining outfits in South Africa and Myanmar. Credit Suisse says Zijin's profit should jump 45 percent this year to 5.1 billion ($750 million) as Chinese demand rebounds from the global slump. Huatai's Liu said it is among China's five most profitable miners. Zijin has been so profitable that one of its early investors, Chen Fashu, last year announced China's biggest charitable gift to date _ an 8.3 billion yuan ($1.2 billion) donation to his own foundation. News reports and Internet chatter questioned whether Chen made the donation to avoid taxes. Zijin's overseas expansion also has stumbled. The company last month abandoned a planned $470 million acquisition of Australia's Indophil Resources Ltd. after local Chinese officials delayed granting approval. Officials in the Democratic Republic of Congo objected to a plan by Zijin and a Chinese government investment fund to buy Platmin Congo, a copper and cobalt miner. Chinese media have questioned Zijin's account of when the toxic leak began. Zijin said heavy rain caused the improperly installed waterproof lining of a waste pond at the mine to tear on July 3. It said 9,100 cubic meters of tainted water _ enough to fill four Olympic-size swimming pools _ seeped into the ground and then into the nearby Ting River. A smaller leak occurred July 16 but was quickly plugged, the company said. But farmers cited by the China Daily said fish raised in pens on the Ting started dying on June 5, almost a month before the rainstorm. Despite the bad publicity, Zijin's financial losses should be limited, Credit Suisse said in a report. A copper smelter was temporarily shut down but Credit Suisse said fines should be no more than 50 million yuan ($7.4 million) _ about 1 percent of this year's profits. The company said prosecutors were investigating but charges have yet to be filed. Local leaders might have a conflict in overseeing Zijin because many own shares in the company and it hires retired officials, according to the newspaper Economic Information Daily, published by the official Xinhua News Agency. "The close relationship between the local government and Zijin Mining helps cover the environmental crises," said an official quoted by the China Daily. "Some law enforcement actions may not be prosecuted fully either." ___ Associated Press researcher Bonnie Cao contributed to this report. ___ Zijin Mining Group: http://www.zjky.cn/tabid/138/Default.aspx Recommend Send IM Story Print Related Articles US-BUSINESS Summary Reuters - 2 hours 22 minutes ago Toyota to post Q1 operating profit Y100 billion: Nikkei Reuters - 2 hours 22 minutes ago Toyota to post Q1 operating profit Y100 bln-Nikkei Reuters - 2 hours 24 minutes ago Markets to issue verdict on stress tests AFP - 2 hours 27 minutes ago Australia targets China's new 'wine class' AFP - Sunday, July 25 News Search Top Stories China sends pandas into wild to bring up cubs BP boss could resign within days Spain's Lorenzo takes MotoGP pole US economy 'gradually' improving: Geithner European governments relieved by bank stress tests More Top Stories » Most Popular Most Viewed Most Recommended Actress Zsa Zsa Gabor in 'critical condition': publicist BP to start drilling off Libya Solar drone lands after record 14 days aloft European governments relieved by bank stress tests Monaco's playboy prince sets wedding date More Most Viewed » Parachuting donkey shocks Russian beachgoers Paris Hilton caught with cannabis in handbag Germany's 'Octopus oracle' keeps perfect record More Most Recommended » Elsewhere on Yahoo! 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