Companies

China's largest gold producer shuts mines for checks

(Agencies)
Updated: 2010-08-10 16:32

China's largest gold-producing city halted output after a fire at a mine killed 16 workers, prompting investors to sell shares of Zijin Mining Group Co and Shandong Gold Mining Co.

Yantai, which accounted for 15 percent of the nation's bullion output, ordered safety checks at most mines on Aug 7, Zijin said today in a statement to the Hong Kong exchange. Shandong Gold said four of its mines are affected.

The fire is the latest in a series of Chinese mining accidents that left 61 people dead this month, adding to a slew of environmental incidents that had led to toxic and oil spills in the Ting River and at the nation's largest crude terminal.

"The recent environmental incidents is an outbreak of accumulated problems over the past few years," said Luo Rongjin, a Beijing-based analyst with Bocom International Holdings Co, "It reflects management deficiency and a long neglect."

Yantai, in Shandong province, has about a tenth of China's gold resources, according to the city government. The nation is the biggest bullion producer. The fire, caused by overheated power cables, took place at Luoshan Gold mine, owned by state- owned Shandong Zhongkuang Group Co.

Temporary Closure

Related readings:  16 killed in gold mine fire in E.China  53 trapped in east China gold mine fire, over 200 escape  Zijin to cut output; earnings impact mild  China to further open gold market: PBOC

"Officials from Yantai are doing a check-up of our ventilation, drainage and power supply systems today," Lin Pufang, Shandong Gold's company secretary, said by phone from Jinan Tuesday. "If we meet all the requirements, we'll probably be able to resume production as early as tomorrow."

The company doesn't expect a "major impact" on production, Lin said. Linglong Gold Mine, Jiaojia Gold Mine, Sanshandao Gold Mine and Xincheng Gold Mine are controlled by Shandong Gold in Yantai.

Zhaojin operates six mines in Yantai with a combined production of between seven and eight tons a year, said spokesman Li Jia. Total gold production last year was 11.3 tons according to its annual report. The company expects production to resume soon after checks, Li said.