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Business
Print Edition> Business
UPDATED: October 18, 2010 NO.42 OCTOBER 21, 2010
Messing Up and Fessing Up
Zijin Mining Group admits responsibility for river contaminations and accepts penalties
By LAN XINZHEN
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On June 23, 2010, some fish farmers on the lower reaches of the Tingjiang River reported additional fish deaths to the local government and suspected that some enterprises might be discharging polluted water into the river. On June 25, environmental protection, aquatic production and epidemic prevention experts from Fujian Province confirmed that the fish deaths were caused by water pollution.

Zijin was later held accountable for two major leaks in July.

Light penalties?

For a listed company, the pollution accident should have had more of a negative impact on its stocks. However, the stock price of Zijin Mining Group Co. Ltd. hasn't slumped, and instead, went up on October 8, the first trading day after the National Day holiday week.

A report by China Asset Management Co. Ltd. said the penalties were light, much lower than the expectations of stock investors, which cleared any uncertainties about the company's future and led to the stock price increase.

Direct economic losses to the company to compensate for the accident were only 31.87 million yuan ($4.78 million). Together with the fine, Zijin would lose a little more than 41 million yuan ($6.15 million). To a company whose total assets have reached 29.65 billion yuan ($4.45 billion), the loss will have little to no impact on operations.

Penalties on government officials involved in the accident have been much harsher. Officials removed from their posts include Shanghang County head Qiu Heqing, deputy Shanghang County head Lan Fuyan, Director of the Shanghang County Environmental Protection Bureau Chen Jun'an, and Director of the Longyan City Environmental Protection Bureau Lin Lianjin.

And compared to the ecological impact on both sides of the Tingjiang River, the penalties on Zijin are unlikely to cause the company to reconsider its operations, said some netizens.

Strengthening regulation

The Zijin pollution accident has highlighted the importance of regulation concerning mining and the ecological environment, because similar accidents have occurred in many mines across China.

At a conference on mining ecological environment regulation held in Taiyuan, Shanxi Province, on September 28-29, Vice Minister of Environment Protection Li Ganjie emphasized that local environment protection administrations should actively explore new paths for protection measures.

Li said the Ministry of Environmental Protection has been carrying out inspections on mining operations in recent years, and has enacted ecological compensation policies, explored effective mechanisms for protecting the environment, strengthened supervision and technical support for ecological environmental protection and accumulated experience in mining environmental protection. However, regulation for the mining ecological environment is much slower than the speed of ecological damage incurred from mining operations.

With the principle of "those who cause pollution being held responsible for cleaning up," the Ministry of Environment Protection will establish and improve the corporate responsibility mechanism of mining and ecological environment restoration, Li said. And under its "restoring while developing" campaign, efforts will be pooled to keep the destruction to the environment to a minimum.

At the conference, Li also appealed to the Ministry of Finance, the Ministry of Land and Resources and the National Development and Reform Commission to carry out inspections on issues including restoration plans, margin accounts and whether applications and utilization channels are running smoothly.

For mining enterprises, the lessons of Zijin may urge them to pay more attention to environmental protection. And to avoid moral denunciation, they will have to pay more attention to the intertwined relationship between environmental protection and their mining operations.

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