Sept. 12 (Bloomberg) -- China's health ministry said milk powder produced by Sanlu Group Co., 43 percent owned by Fonterra Cooperative Group Ltd., may have been tainted with the chemical melamine and could be linked to kidney stones in infants.

Sanlu has recalled milk powder made before Aug. 6 while the investigation proceeds, the Ministry of Health said in a statement yesterday. At least seven provinces have reported cases since June of babies with kidney stones, a rare ailment in infants, while one died, Xinhua News Agency said.

The public should ``immediately stop using this brand of milk powder and seek timely treatment for infants who show abnormal symptoms,'' the health ministry said in the statement. The ministry also ordered health officials to collect Sanlu's sales data in the country for submission by 5 p.m. today.

The product recall and health warning underscores the battle China faces in scrutinizing product quality and ensuring food safety. Melamine, a white crystalline compound used for making plastics and tanning leather, was found in exported pet food last year, blamed for killing thousands of cats and dogs in the U.S.

Sanlu officials couldn't be reached for immediate comments after three attempts to reach the company by Bloomberg News. A spokeswoman, who only identified herself as Yang, yesterday said the company is ``actively cooperating with the government's investigation.''

Wal-Mart Stores

``We don't exclude the possibility that people may get fake products in rural areas,'' she said from northern China's Shijiazhuang city.

Sanlu's milk powder sells for 25 yuan ($3.65), less than half the price of other brands, including imported powder, Xinhua said.

Wal-Mart Stores Inc. and Carrefour SA are pulling Sanlu milk powder off their shelves, Xinhua reported today, citing Wal-Mart spokesman Dong Yuguo and Carrefour spokesman Chen Bo.

The police questioned 78 people, Xinhua said in a separate report, citing Shijiazhuang Vice Mayor Zhao Xinchao. Shijiazhuang, Hebei province, is where the formula was manufactured by Sanlu.

The 78 people included dairy farmers and milk dealers, Xinhua said. The suspects may have added water to the milk they sold to Sanlu to make more money, Xinhua said, citing Zhao.

Contaminated baby formula may also have reached the U.S., according to the U.S. Food and Drug Administration, which yesterday warned consumers that illegally imported Chinese milk powder may contain melamine.

Kidney Stones

Gansu province, which first publicized a spike in infant kidney problems, has had 59 such cases this year, after reporting none in 2006 and 2007, according to Xinhua.

The General Administration of Quality Supervision, Inspection and Quarantine has been investigating since Sept 9.

The Ministry of Health today issued a list of symptoms in babies for doctors and hospitals to watch for, including unexplained crying and vomiting, especially when urinating, or swelling and pain in the kidney area.

Thirteen babies died of malnutrition in 2004 and almost 200 were hospitalized in 2004 in eastern China's Anhui province after being fed substandard milk. The milk powder, labeled with false information, contained no nutrition, causing infants' heads to swell while their bodies starved, according to Chinese media reports then.

To contact the reporter on this story: Dune Lawrence in Beijing at dlawrence6@bloomberg.net

Last Updated: September 12, 2008 06:53 EDT