Two
major Chinese pesticide companies (Jiangsu Yangnong & Changqing) have been accused of knowingly allowing a
contractor to bury tonnes of highly toxic and carcinogenic waste under a
factory in Jiangsu Province, possibly contaminating local groundwater and the
drinking water of nearby residents. If found guilty, the companies could face
huge fines and leading executives could face criminal charges, according to
analysts CCM.
The
allegations against Jiangsu Yangnong Chemical Group Co., Ltd. and Changqing
Chemical Group Co., Ltd., leading pesticide manufacturers that export to over
fifty countries, first emerged via an anonymous letter to government magazine Environmental Protection on September
25, but the story was quickly picked up by national networks such as Sina News
and has developed into a full-blown scandal that threatens to do the companies
huge damage.
Both
companies have issued statements in the last twenty-four hours strongly denying
the accusations, but this has not stopped their stock prices falling sharply
since the story appeared. Yangnong Chemical’s shares resumed trading this morning
and as of 15:00 were already down 9.2%, while Changqing Chemical’s share price
dropped just under 7% yesterday and another 4% this morning.
Commented
He Shuanglin, senior editor of Glyphosate China Monthly Report:
“Yangnong
Chemical is by far China’s biggest producer of pyrehroid insecticides and is
also one of the country’s largest glyphosate manufacturers, while Changqing
Chemical’s pesticides revenues reach almost RMB1.8 billion, so any damage to
these companies will send ripples through China’s agrochemicals market.
“However,
at the moment it appears very unlikely that either company will face a
production shutdown since the allegations concern waste disposal rather than
the production process itself, so supplies of key pesticides should not be
affected.
“For
the companies themselves, it is far too early to say how severely they will be
affected by the scandal. Previous cases suggest that, if found guilty, the
fines would be in the millions of RMB, but the companies are sure to fight
these charges ferociously,” He added.
How the story emerged
The
author of the anonymous letter to Environmental Protection was Zhou Jiangang, a
local pig farmer who in March invested RMB2.3 million (USD360,000) to buy a pig
breeding company in Jingjiang, a small city a two-hour drive from Shanghai.
According
to iFeng News, within days of starting work at the pig breeding company, Zhou
started to develop a nasty skin condition with symptoms including sclerosis,
ulcers and pruritus, and booked an appointment with a doctor for March 15. The
examination confirmed that his problems were being caused by chemicals
pollution, which had weakened his immune system.
Zhou
began to investigate. After talking to his neighbours and nearby chemicals
workers, he discovered that the site of his pig breeding company was previously
used as a petrochemicals facility named Jingjiang Houhe Petrochemical Factory,
before it closed down in September 2013.
A
search of the property led him to discover a number of documents from this
period in a drawer, including signed contracts between Changqing Chemicals and
Houhe Petrochemical Factory from October 2003, several invoices stating the
waste processing fees, and a series of waste exchange and waste transfer
application forms, iFeng News reports. Zhou claims that the documents show that
Houhe Petrochemical Factory was contracted by Yangnong Chemical and Changqing
Chemical to dispose of their hazardous waste for several years from 2000.
Zhou
then began to look for the source of the pollution. He told iFeng News what he
found:
“The
ground of the breeding farm is covered by concrete, which is 25-30cm thick.
Under the concrete, it contains a mixture of waste and earth (20cm deep), pure
black silt-like waste (20cm-2.5m deep), earth (2.5-2.8m deep), and pure waste
(2.5- 4.5m deep) again,” stated Zhou.
This
account was corroborated by a local worker, who claimed to have helped bury the
waste:
“There
may have been several tonnes of buried waste under the ground, because the
burying depth is 2-3 stories deep (6-9 meters),” the worker told iFeng News.
Zhou
took samples of the waste and sent them to the Analysis and Test Center in
Applied Technology Academy of China Science Institution in Zhejiang for
testing. On May 18, the Center sent him back a Test Report showing that the
samples contained 35 different kinds of organic constituents.
According
to iFeng News, a friend of Zhou’s in the Environmental Protection Agency told
him:
“80%
of the organic constituents are highly carcinogenic. The content of carcinogens
is several thousand times higher than limits set by the government. Some of the
constituents are tens of thousands of times higher than the limit.”
On
July 10, Zhou reported the event to Jingjiang Environmental Agency with all the
related documents, and the Agency opened a site investigation and began taking
samples the same day.
The
Jingjiang Environmental Supervision Group released an update on the
investigation stating:
“There
is a deep pit in the south-east of the farm. Inside the pit, there is
half-liquid, oily matter which is pungent. It is suspected to be chemical
hazardous solid waste. The area of the deep pit should be protected to prevent
anyone else coming near and to avoid secondary pollution.”
There
is also a possibility that the drinking water of people living near the farm
and downstream along the Yangtze River may be contaminated, according to Sina
News.
Laying the blame
For
his part, Zhou is laying the blame squarely on the shoulders of Yangnong
Chemical and Changqing Chemical:
“In
order to cut the cost of dealing with the poisoned waste, these two companies
signed the contracts about dealing with the waste even though they knew that
the factory didn't have the ability to dispose of the pollution safely,” Zhou
told iFeng News.
However,
both companies have strongly denied these accusations. At noon yesterday
(September 28), Changqing released the following statement via China's Capital
Market Information Disclosure Platform:
“1.
Changqing Chemicals has always disposed poisonous waste according to
regulations. The disposal process and the related documentations can be
checked. Changqing Chemicals has not
performed any illegal disposals and has never been punished by the
Environmental Protection Agency.
“2.
As reported in the news, Jingjiang Houhe Petrochemicals Factory had a Hazardous
Wastes Business License, which was approved by the Environmental Protection
Agency and had the ability to dispose of the hazardous waste. The contract
signed between Changqing Chemical and Jingjiang Houhe Petrochemicals Factory on
October 2, 2003 stated clearly that Jingjiang Houhe Petrochemicals Factory
should be responsible for the disposal of solid waste, that spilling and
dripping of solid waste must not happen during transportation, and that solid
waste cannot be transferred without permission. If any such actions occur,
Houhe Petrochemicals Factory would be liable. Changqing Chemicals submitted all
transfer documentation according to the requirements set by the Environmental
Protection Agency. The process of disposing of hazardous waste meets the rules
laid out in the Jiangsu Hazardous Waste Management Interim Procedures.
Changqing Chemicals has nothing to do with the illegal disposing of hazardous
waste in Jingjiang Houhe Petrochemicals Factory.
(Statement translated
by CCM)
Yangnong
Chemical also released a statement this morning:
“1.
Yangnong Chemical has had no business with Jingjiang Houhe Petrochemicals
Factory since 2009. According to the Protocol signed between Yangnong Chemical
and Jingjiang Houhe Petrochemicals Factory: Jingjiang Houhe Petrochemicals
Factory should strictly obey environmental and safety rules when receiving and
disposing of the waste. If any incident happens, it should be Houhe
Petrochemical Factory's own responsibility and Yangnong Chemical would accept
no liability for it.
“2.
During the duration of our business cooperation, Jingjiang Houhe Petrochemical
Factory had the ability and quality to receive and dispose of hazardous waste.”
“3.
For a long time, Yangnong Chemical has always been disposing of hazardous waste
strictly according to the rules. After investigation by ourselves, the transfer
and disposing process of hazardous waste between Yangnong Chemical and
Jingjiang Houhe Petrochemical Factory conforms to the related rules. Yangnong
Chemical has nothing to do with the illegal disposal of hazardous waste by
Jingjiang Houhe Petrochemicals Factory.”
(Statement translated
by CCM)
What happens next?
The
case against Yangnong Chemical and Changqing Chemical appears to hang on
whether the two companies had any knowledge that Houhe Petrochemical Factory
was not capable of disposing of the waste correctly.
Waste
disposal is a controversial issue in China, as many incidents have occurred in
recent years where pesticide and petrochemical manufacturers have signed
agreements with rogue contractors offering impossibly low fees for waste
disposal, and the contractors have subsequently dumped the waste illegally to
save costs.
In
May this year, for example, Zhejiang Jinfanda Bio-chemicals Groups Co. Ltd., a
glyphosate manufacturer, pleaded guilty to contracting the handling of 35,000
tonnes of hazardous waste to four unqualified companies. The companies quoted
Jinfanda Bio-chemicals just RMB60-120 per tonne to dispose of the waste.
If
Yangnong Chemical and Changqing Chemical are found guilty of a similar lapse,
previous cases suggest that the punishment would be severe. Jinfanda
Bio-chemicals, for example, was fined RMB75 million by Longyou Town People’s
Procuratorate in Zhejiang Province.
Criminal
charges could also be brought against any executives in the company involved in
the deal with Houhe Petrochemical Factory.
However,
both companies are adamant that Houhe Petrochemical Factory had all the correct
documentation. If that is true, then proving any malpractise would be much more
difficult.
CCM
will continue following this story closely and will post further updates in our
pesticides market Newsletters as more
details emerge.
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