Danish Arla says implicated in China milk scandal

COPENHAGEN Tue Sep 16, 2008 5:32pm EDT

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COPENHAGEN (Reuters) - Danish-Swedish dairy cooperative Arla said on Tuesday its Chinese joint venture Mengniu Arla's baby formula had been implicated in a growing Chinese infant milk scandal.

Chinese officials last week ordered a nationwide probe into all baby milk powders after it was reported that dozens of children had developed kidney stones after drinking tainted formula.

Chinese state media said on Tuesday that 20 percent of the country's dairy firms probed in the wake of the health scare have been found to have produced melamine-tainted formula.

Arla Chief Executive Peder Tuborgh told Danish media that three out of 28 tests taken from the firm's Chinese partner Mengniu showed traces of melamine, a banned toxin.

The joint venture, Mengniu Arla, produces Mengniu's milk powder.

"Of course it's a disaster and a terrible catastrophe for the consumers," Tuborgh told reporters while on a trip to visit a new plant in Hohhot, Mongolia.

Tuborgh said Mengniu Arla was recalling products, but did not wish to speculate on the further significance the discovery would have.

Two infants have died and more than 1,200 have been diagnosed with kidney illness in the growing scandal.

Arla, which is owned by about 8,500 Danish and Swedish farmers is one of the largest dairy firms in the world with global brands such as Lurpak butter and Apetina cheese.

(Reporting by Kim McLaughlin)

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