China Closes Lead Smelters and the Price Rises

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Non-ferrous Metals

As a follow on from our article this week on metal poisoning in China, it is interesting to note that the London Metal Exchange lead price has surged 7.9% to $2,023 per metric ton, it’s highest level since September 2008, on news that China has responded to local unrest over the poisoning and closed lead smelters. According to the FT, Henan province has closed a third of its lead smelters.

Whether stung by international coverage or reported cases of rioting by the local population, the authorities have closed the Jinglian Manganese smelter in Wenping. About 1000 villagers are said to have blocked a road and turned over a police car during protests against the release of toxins, including lead, from the smelter.

The China Daily reports that at least three lead smelters in Central China’s Henan province and two in Shaanxi province, with a combined capacity of about 6% of China’s annual production, were ordered to temporarily halt operations in recent days. The Dongling Lead and Zinc Smelting facility in Shanxi has been closed completely according to local officials quoted in the United Press. Henan, the top refined-lead producing province in the country, has shut 240,000 tons of annual lead-smelting capacity after the poisoning scandal broke. “Three plants were shut on Sunday, with a monthly output of 15,000 to 20,000 tons,” said a senior executive at a large lead smelter in Henan. Closures could well follow in Hunan, Yunnan and Guangdong, apparently the poisoning is really common in the immediate environment around China’s smelters especially in the poorer inland provinces where any investment is welcome and controls are most lax.

The problem is unlikely to get better in the short term. With the October celebrations of the 60th anniversary of the revolution just 5 weeks away, the authorities are at pains to avoid public displays of unrest. It is easier to be seen to respond positively to these situations at the expense of a loss in industrial output. Sooner or later the plants will come back on stream, may be with improved environmental controls, may be not. Meanwhile, lead supply for the world’s largest producer and consumer of the metal is likely to get tighter still as public disquiet and plant closures spread.

–Stuart Burns

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