Chinese molybdenum miner halts production after tailings spill

BEIJING (Reuters) - Yichun Luming Mining Co Ltd, the owner of a tailings dam in northeast China that leaked last month, contaminating the local river system, has been ordered to suspend molybdenum production, according to a report on a provincial government website.

The emergency management bureau in the city of Yichun in Heilongjiang province will “temporarily withhold the company’s safe production licence” while rectifications are carried out, the report on the Heilongjiang government website said on Wednesday.

“Restrictive measures” have also been taken against Yichun Luming’s main managers, it said, without elaborating, adding that a team of experts has been assembled to investigate the cause of the spill.

Tailings dams are commonly used by mining firms to store waste remnants of ore but they have come under close scrutiny since the collapse of one in Brazil last year that killed more than 250 people.

In China, the incident at Yichun Luming’s tailings pond on March 28 caused no reported casualties but discharged 2.53 million cubic metres of waste before the leak was plugged on March 31. Yichun Luming’s licence for the tailings pond has also been suspended, the Heilongjiang report said.

The spill contaminated water up to 110 km (68 miles) away, putting the local water supply at risk, provincial authorities said last week, prompting a 650-person clean-up effort.

Yichun Luming, a subsidiary of state-run China Railway Resources Group, did not immediately respond to a request for comment.

One minor metals trader familiar with Yichun Luming said it sells molybdenum concentrate to firms that make ferromolybdenum, used in stainless steel.

He put the company’s production at around 30,000 tonnes of molybdenum concentrate per year, adding that it was a “significant” supplier accounting for around 30% of spot market sales in China.

The global market for molybdenum, valued for its anti-corrosive and strengthening properties in the oil and gas and automotive industries, is about 260,000 tonnes a year.

A second trader said a long suspension could mean significantly lower supplies.

Research house Antaike said on Wednesday that China’s molybdenum concentrate production in the first quarter fell by 13.8% year-on-year to 21,200 tonnes and in February saw its lowest monthly total since 2017 at 6,453 tonnes due to the impact of the coronavirus outbreak.

March production rebounded but remained at a relatively low level, Antaike said, without mentioning the tailings spill.

Reporting by Tom Daly; additional reporting by Pratima Desai in London; editing by Richard Pullin and David Evans