October 31, 2005

Stricter environment laws hit China lead smelters

By Polly Yam

HONG KONG (Reuters) - China's stricter environmental
regulations are delaying construction of a
80,000-tonne-per-year lead plant in Henan, but are encouraging
small lead producers in Yunnan to merge their operations,
industry officials said on Monday.

Privately held Dongfang Gold and Lead Co. would start
building its new lead plant by late December this year, having
delayed construction by more than a year, an official said.

The construction was originally planned to have begun in
July 2004.

"They have been doing the environmental assessment for the
project," the official said, referring to the environmental
authority of the Henan provincial government in south-central

Dongfang also operates another 60,000-tonne-per-year lead
plant, which has smelting and refining capacity.

Emissions from Dongfang's 60,000-ton lead plant exceeded
levels set by the government when the plant ran trials in April
2004, a report posted on the web site of the State
Environmental Protection Administration said.

The official said Dongfang had already spent more than 10
million yuan to upgrade the 60,000-ton plant in Jiaozuo city
and it now met requirements of the provincial environmental
authority. He added that emission violation would not affect
the approval for its new lead plant.


Lead, used in car batteries, cable covers and solder for
pipes and plumbing, rose 1.7 percent in value so far this month
to $961 a ton on Monday for delivery on the three months of the
benchmark London Metal Exchange.

China is a major lead supplier in the world but its exports
are falling due to strong domestic demand.

In September its refined lead exports fell to 21,962 tons,
down 37 percent from August and 51 percent from July of 2005.

Small lead producers in Gejiu city in China's southwestern
Yunnan province struggle to pay big bucks to upgrade their
smelters as the local environmental authority monitor their
emissions closely.

Three small lead producers in the city have merged to
become Zhen Xing Lead Co. in face of the stricter regulations,
that require stronger financing ability. Zhen Xing has capacity
of 60,000 tons refined lead a year.

"The environmental authority monitors smelters' emissions
24 hours a day," said a senior executive for Zhen Xing, which
is the largest lead producer in Gejiu city.

More than 20 lead smelters, including Zhen Xing, are
operating in Gejiu with combined smelting capacity at about
200,000 tons a year.

"Others will have to do the same," the executive said,
referring to mergers.

China produced 1.7 million tons of refined lead in the
first nine months this year, up 24.5 percent from a year ago.