Insight: China's losing battle against state-backed polluters

Sun Mar 31, 2013 6:17pm EDT
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By David Stanway

SHANGHANG COUNTY, China (Reuters) - When Zijin Mining Group threatened to move its headquarters some 270 kms from its home county of Shanghang to Xiamen on China's southeast coast, a local Communist Party boss rushed to confront the company's chairman Chen Jinghe.

"If you want to move, you'll have to move the Zijin Mountain to Xiamen as well," the official told Chen, referring to a vast local mine that has helped transform the firm into China's top gold producer and second-biggest copper miner.

The exchange, recited with some pride by local residents, reflects the anxieties felt by regional governments as they consider the prospect of losing their biggest cash-cows.

It also highlights the challenges facing Beijing as it tries to take on entrenched local bureaucracies and the powerful state-owned polluters they sponsor and protect, with the central government desperate to address decades of chronic environmental damage and force growth-addicted provinces to raise standards.

"The problem is that they still chase profit," said one resident outside a store near Zijin's Shanghang headquarters who did not want to give his name. "Protecting the environment is like taking medicine, and they don't want that."

Zijin Mining is one of China's biggest state-owned firms, with projects in 20 provinces and seven countries. In 2010, it was rocked by two major pollution scandals that cost it millions of yuan in fines and compensation payments and battered the share price of its listed vehicles in Shanghai and Hong Kong. It had already been reprimanded by the Ministry of Environmental Protection for failing to meet standards and its reputation was now badly damaged.

In Shanghang itself, a 9,100 cubic meter torrent of toxic slurry from the Zijin Mountain gold-copper mine burst through a tailings dam and entered the Ting river, killing 4 million fish. It took nine days before Zijin admitted a problem had occurred, prompting accusations of a cover-up by state media.

But Shanghang is a one-company town, and the Zijin Mountain mine dominates the landscape and the economy, providing 70 percent of local revenues and most of the county's jobs.   Continued...

A Chinese national flag flies in front of Beijing Telegraph Building on a hazy morning in central Beijing in this February 28, 2013 file photo. REUTERS/Petar Kujundzic/Files