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Zijin Shares Fall After Lawsuit Over Dam Collapse

Zijin Mining Group Co., China’s biggest gold producer, fell the most in 11 months in Shanghai trading after the company said it faces legal claims in connection with a fatal dam collapse at a tin mine.

Shares fell as much as 7.3 percent to 9.52 yuan, the biggest drop since Nov. 27, 2009, and traded at 9.60 yuan at 10:12 a.m. local time, in Shanghai. The Shanghai benchmark index fell 0.9 percent. In Hong Kong, the stock dropped 3.6 percent.

Two subsidiaries are being sued by the Xinyi city government for at least 19.5 million yuan ($2.9 million), a Guangdong court notified, according to a statement on Oct. 17 from the gold miner.

Zijin said on Sept. 27 four people died after a dam at its mine collapsed and the Guangdong government is investigating. Tang Tao, a spokesman of the Guangdong government, said that 28 people were dead or missing after the accident, and an initial investigation showed “serious quality problems” with Zijin’s tailing dam.

The accident would lead to a loss of 19 million yuan, Zijin said on Sept. 27. The tin mine was in trial production, it said.

Separately, Zijin had been fined 9.6 million yuan for the July acid-waste spill that poisoned almost 2,000 metric tons of fish, the company said on Oct. 7. The company spilled 2.4 million ton of gallons of acidic waste from its Zijinshan copper mine in Fujian province, polluting the Ting river.

Chairman Chen Jinghe will have to focus on cleaning up and expansion plans may be delayed after the accidents, according to UOB-Kay Hian Ltd. Zijin posted a profit of 3.6 billion yuan in 2009 after gold and copper prices rose.

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