April 12 (Bloomberg) -- More than 1,000 kilometers from Tokyo, Seoul is having its very own crisis of faith in tap water, and radiation isn’t to blame.
In South Korea, the carcasses of 9.7 million cattle, pigs and poultry were buried in mass graves across the frozen countryside after outbreaks of foot-and-mouth disease and bird-flu last winter. That’s raised concerns that pollutants may enter groundwater now that the soil has thawed, said Jun Kwan Soo, a professor of environmental engineering at Yeungnam University.
“Health has to come before everything else regardless of the expense,” said Lyu Soon Ha, a 63-year-old grandmother who is buying bottled water from remote Jeju Island because she fears supplies from the mainland could be contaminated. “I want to give my grandchildren good water when they come to visit.”
The failure to contain foot-and-mouth disease and properly dispose of the animals prompted Agriculture Minister Yoo Jeong Bok to offer his resignation on Jan. 28, while Prime Minister Kim Hwang Sik on March 24 estimated the financial cost of the outbreak and cleanup to be about $2.8 billion. South Korea is monitoring more than 4,000 burial sites after repairing 417 to ensure pollutants are kept out of the water supply, the Central Disaster and Safety Countermeasures Headquarters said March 31.
Lyu’s concerns are proving a boon for bottled-water importers including Danone SA and local plumbing suppliers and chemicals companies.
Nongshim Co., which holds the exclusive rights to market the Jeju Samdasoo bottled water favored by Lyu, gained 23 percent since Nov. 29, when the agriculture ministry announced the first foot-and-mouth cases. Jeju Island is about 100 kilometers south of the Korean peninsula and is free of foot-and-mouth disease.
About 3,000 tests from wells near animal graves have not revealed any groundwater contamination, the environment ministry said in a statement on March 29. Tap water is safe to drink, Lim Chea Hoan, a spokesman for the ministry, said on April 11.
Lyu said her concern is that warmer weather may change that. Yeungnam University’s Jun said while work to repair grave sites has reduced the chances of contamination, risks remain.
The average daily temperature in Andong, the rural district 200 kilometers southeast of Seoul where the first case of foot-and-mouth was reported, was minus 5.5 degrees Celsius in January at the height of the cull, according to the Korea Meteorological Administration. The daily average in April is about 12 degrees.
Water Lime, an online retailer of imported bottled water, said demand for Danone’s Evian and Volvic brands is increasing as South Koreans question the quality of local supplies.
“We expect many more consumers to drink imported water,” Water Lime Chief Executive Officer Shin Hyung Chul said March 31.
Evian and Volvic sales may increase as much as 20 percent by value this year, partly on growing fears about water quality, said Lim Sun Young, the marketing manager for Danone Waters Korea, the Paris-based parent’s local unit. She declined to provide exact figures.
Some graves were dug near rivers and on mountain slopes, and typically lined with sheets of vinyl that weren’t sealed at the seams, Lee Byoung Guan, Deputy Director of the National Veterinary Research & Quarantine Service, said by telephone on March 31. In the worst cases, animals were buried alive, he said.
“The disease spread so fast beyond our control that some local governments scrambled to kill and bury the livestock in a hurry, not always following the rules,” said Lee.
In Tokyo, concerns about radiation contamination in tap water from a crippled nuclear power plant prompted Coca-Cola Co. to run its bottled water plants in Japan 24 hours a day to meet demand. Levels of iodine-131 found in Tokyo’s tap water on March 22 and March 23 exceeded the recommended limit for infants.
Shares of South Korean plumbing suppliers Gentro Co. and Nuvotec Co. rose 80 percent and 56 percent respectively since Nov. 29, partly on speculation the cleanup would require new tanks, drainage pipes and other equipment for the sites.
Park Yang Ju, an analyst with Daishin Securities Co. in Seoul, said stocks that rose sharply such as Gentro and Nuvotec may not sustain gains unless sales meet the speculation.
While concerns linger about the effectiveness of the cleanup, the alert level for foot-and-mouth disease itself was lowered today to “caution” from “warning,” indicating it is under control, the agriculture ministry said in a statement.
Gentro has won work rebuilding burial sites and expects more contracts, Park Kwang Ho, the Seoul-based company’s general manager for planning, said on April 1. Nuvotec also forecasts higher sales, said Lim Ki Tae, a deputy general manager of the company’s administration team.
Woongjin Chemical Co., a fabrics manufacturer that also makes membranes for water filters, and Kolon Corp., with investments in water purification, may rise on concern about water pollution, Park Jae Chul, an analyst with Mirae Asset Securities Co. in Seoul, said by phone on April 1.
The outbreak of foot-and-mouth disease in South Korea, the worst reported in the country, coincided with the return of bird-flu viruses in poultry.
Prices for agricultural, dairy and fisheries goods in South Korea increased almost 15 percent in March while inflation accelerated to a 29-month high and breached the central bank’s target range for a third month.