China's Hunan Ava Dairy recalls tainted infant formula

SHANGHAI (Reuters) - China's Hunan Ava Dairy Co Ltd said on Monday it will recall baby formula sold under its Nanshan Bywise brand after a cancer-causing agent was found in test samples, the latest blow to the country's scandal-ridden milk industry struggling to restore consumer confidence.

Five batches of Nanshan Bywise infant milk powder produced between July and December last year failed sample tests for aflatoxin, a toxin produced by a fungus that is widespread in nature, the Guangzhou Industrial and Commercial Administration Bureau said in a statement issued last Friday. (here)

Hunan Ava Dairy, indirectly owned by a fund run by CITIC Capital, said in a statement on its website that it will recall all infant formula in question and halt production and distribution. The company said the source of the aflatoxin contamination was due to cows eating moldy feed.

"This incident has created distress and hurt for the majority of customers, and we would like state our sincerest apologies," Hunan Ava Dairy said in its statement. (here)

This latest case of contaminated milk comes a month after China's biggest milk producer by revenue, Inner Mongolia Yili Industrial Group Co (600887.SS), recalled baby formula tainted with "unusual" levels of mercury.

In December, China Mengniu Dairy Co Ltd (2319.HK) products were destroyed after they too were found to contain aflatoxin.

China's milk industry is struggling to restore consumer confidence after a series of scandals, the worst of which was in 2008 when milk laced with the industrial chemical melamine killed at least six children and sickened nearly 300,000.

(Reporting by Melanie Lee; Editing by Matt Driskill)