China’s very own BP?

An oil calamity in Dalian too

It’s a title no Chinese company wants to hold. A year or two ago, things would have been different. But since the catastrophic oil leak in the Gulf of Mexico, being labelled as ‘China’s BP’ is a far less attractive proposition. And as things stand, it’s a contest that Zijin Mining Group looks in danger of winning.

Zijin is behind a devastating spill of acidic copper sludge into a major river in western Fujian. Reputationally, it’s been a damaging spill too. By the company’s own account it took at least nine days to warn locals of the dangers of contamination, and only then after the provincial government broke the news first. The company’s credibility was damaged further after media suggestions that the original leak probably started over a month before.

Zijin is China’s largest gold miner and its third largest copper miner. Listed in Hong Kong and Shanghai, it has seen its share price tumble 20% since the accident. But the company has one advantage: rosy relations with local officialdom. “The government will not allow us to become like BP,” a Zijin insider confided in Southern Weekend.

But that could change if the spill’s effects get worse. It has already reached further downstream into Guangdong province, a development that might cost Zijin the support of its political backers. “In addition to the pollution scandal,” the China Daily warned, “Zijin officials now face charges that they enjoy protection from local government officials.”

The crisis began when the seals on a ‘waste water containment pond’ broke open, supposedly because of heavy rain. It turns out that the company had also built an additional channel taking excess ‘waste water’ directly into the Ting River (at least 9,600 cubic metres of it so far). Locals told the Southern Weekend that the spill really began on June 5, followed by another surge on June 21 (the company says it started on July 3). Fish farmers along the Ting say they saw the water turn dark and fish began to die en masse.

The local government was initially unmoved by their plight, according to reports. Fishermen responded by dumping two truckloads of dead fish in front of government offices.

Still, the spill on July 3 got everyone’s attention. “Before July 3 we had not checked the source of the pollution,” Lan Fuyan, deputy mayor of Shanghang County admitted to media. Officials are blaming faulty monitoring equipment for the delays in spotting it.

They have also said that water in the river still conforms to national standards. Nearby residents doubt that, having seen what has been happening to the river’s fish. Lime and bleach powder is now being poured into the river to neutralise the effects of acid and copper in the water. The mine’s waste was still leaking as recently as last Friday, according to Zijin (and last Saturday according to locals).

National press coverage means that the search for culprits is gathering pace. Work at the mine has been suspended and three high-ranking Zijin staff arrested. Three local officials have also lost their jobs, including the head of the local environmental protection department. But as much as 60% of local Shanghang County’s tax revenue came from Zijin last year, according to media reports. That appears to have helped shield the company’s environmental record from too much scrutiny, despite censures received from the Ministry of Environmental Protection (in 2008 and again in May this year).

The competition to be China’s BP is far from over. Last Friday, a tanker spilled 1,500 tonnes of crude oil into the sea off the port of Dalian. The leak caused a fire that took 15 hours to get under control, and 100 square kilometres of the Yellow Sea are said to have been polluted. It’s a much smaller disaster than the one in the Gulf of Mexico, of course. But, regardless of the size, China won’t want to see any more contenders for BP’s unwanted crown.

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