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Yangtze Business Daily News●Huang Cong, reporter of Yangtze Business Daily

Luoping Zinc and Electricity (002114.SZ) received a series of fines for failing to correct its safety and environmental problems despite repeated warnings.

On July 20, Luoping Zinc and Electricity announced that the company's sulfur dioxide emissions from the common flue gas outlet for boiling roasting and flue gas acid production exceeded the standard and was fined 141,000 yuan.

Less than a month ago, on June 29, Luoping Zinc and Electricity announced that its three wholly-owned subsidiaries were fined a total of 155,000 yuan for safety and environmental issues.

Within one month, Luoping Zinc and Electricity was fined nearly 300,000 yuan for safety and environmental issues.

For Luoping Zinc and Electricity, a fine of 300,000 yuan is not a small amount. In the past two and a half years, the company's non-net profit has been in the red, with a cumulative loss of about 420 million yuan.

It is worth mentioning that since 2008, Luoping Zinc and Electricity has not distributed dividends for 16 consecutive years, making it a veritable "tightwad".

Subsidiaries repeatedly cross the red line of safety and environmental protection

Luoping Zinc and Electricity's main businesses are hydropower generation, lead and zinc mining, ore dressing, lead and zinc metal smelting and refining of ancillary products.

On July 20, Luoping Zinc and Electricity issued an announcement that the company recently received an "Administrative Penalty Decision" issued by the Qujing Municipal Ecological Environment Bureau.

The announcement shows that on March 28, 2024, the tail gas treatment system of the boiling roasting and flue gas acid production of Luoping Zinc and Electricity Sulfuric Acid Plant was shut down due to the tripping of the alkali liquid circulation spray pump, resulting in excessive sulfur dioxide emissions from the common flue gas outlet of boiling roasting and flue gas acid production, which violated the relevant provisions of the "Law of the People's Republic of China on the Prevention and Control of Air Pollution". The Qujing Municipal Ecological Environment Bureau decided to impose an administrative penalty of RMB 141,000 on Luoping Zinc and Electricity for its illegal behavior.

In this regard, Luoping Zinc and Electricity said that this administrative penalty will reduce the company's current net profit by 141,000 yuan, but will not have a significant impact on the company's production and operations. The company sincerely apologizes for the negative impact caused by this incident.

A reporter from the Yangtze Business Daily found that this was the second time Luoping Zinc and Electricity had been fined for safety and environmental issues in the past month.

On June 29, Luoping Zinc and Electricity issued an announcement showing that the company's three wholly-owned subsidiaries in Guizhou: Puding County Derong Mining Co., Ltd. (referred to as "Derong Mining"), Puding County Hongtai Mining Co., Ltd. (referred to as "Hongtai Mining"), and Puding County Xiangrong Mining Co., Ltd. (referred to as "Xiangrong Mining") were subject to joint inspections by relevant safety and environmental protection supervision and management agencies. Due to the existence of some punished matters, the Guizhou company has recently received penalty decisions issued by the Puding County Emergency Management Bureau, Anshun City Emergency Management Bureau and Anshun City Ecological Environment Bureau.

Derong Mining and Hongtai Mining were both fined RMB 45,000 for safety and other issues. Xiangrong Mining (tailings pond) was fined RMB 20,000 for not immediately launching the Emergency Plan for Sudden Environmental Events of Puding County Xiangrong Mining Co., Ltd. (tailings pond) after a wastewater leak (general environmental emergency) occurred, and also failed to report to the county-level government or ecological environment authorities in a timely manner.

At the same time, Xiangrong Mining was fined 45,000 yuan because the mine was a medium-type hydrogeological mine and was not equipped with professional technical personnel for water prevention and control; the cables used underground in the mine had not been tested and inspected by a professionally qualified institution.

Luoping Zinc & Electricity said that the actual payment of the above-mentioned fine will reduce the current net profit by 155,000 yuan. The company attaches great importance to this matter and urges the three subsidiaries to complete the above-mentioned rectification work as required.

Overall, in the past month, Luoping Zinc and Electricity was fined nearly 300,000 yuan due to safety and environmental issues.

Fule lead-zinc mine shut down three times in three years

A fine of 300,000 yuan may not seem like much, but it is a lot for Luoping Zinc and Electricity.

In 2022 and 2023, Luoping Zinc and Electricity's operating income was RMB 1.969 billion and RMB 1.538 billion, respectively, a year-on-year increase of 7.89% and -21.88%, respectively; the net profit was RMB -236 million and -209 million, respectively, and the non-net profit was RMB -204 million and -207 million, respectively, both of which were consecutive losses.

On July 12, Luoping Zinc and Electricity released its 2024 semi-annual performance forecast, showing that the company expects its net profit in the first half of the year to be 1.5 million to 2.5 million yuan, a year-on-year increase of 101.58% to 102.63%; the non-net profit loss is 4.7437 million yuan to 5.7437 million yuan, a year-on-year increase of 94.63% to 93.50% respectively.

Luoping Zinc and Electricity stated that in the first half of 2024, the company focused on improving the quality and efficiency of production and operation and refined management, and the zinc smelting recovery rate was greatly improved compared with the same period last year; some of the company's zinc products were sold at forward spot prices, and the increase in prices brought increased profits; the estimated liabilities set aside in previous years (1,017 investor lawsuits) were all settled or concluded during the reporting period, and the original over-set estimated liabilities were reversed by 6.7977 million yuan in the current reporting period; due to the continued rise in inventory market prices, the provision for inventory impairment decreased year-on-year.

Overall, in the past two and a half years, Luoping Zinc and Electricity’s net profit excluding non-recurring items has accumulated a loss of approximately 420 million yuan.

It is worth mentioning that since 2008, Luoping Zinc and Electricity has not distributed dividends for 16 consecutive years, making it a veritable "tightwad".

In fact, as early as 2016, the first round of central environmental protection inspection feedback pointed out that Luoping Zinc and Electricity had prominent hidden dangers of heavy metal pollution.

In response to this, in December of that year, based on Qujing City’s inspection and rectification plan, Luoping Zinc and Electricity formulated a disposal plan for 100,000 tons of lead-containing waste slag.

However, on June 21, 2018, the Ministry of Ecology and Environment issued a notice on the environmental protection issues of Luoping Zinc and Electricity. The notice showed that Qujing City had formulated a rectification plan in December 2016 and proposed: "Complete the harmless treatment of 100,000 tons of lead-containing waste slag from Luoping Zinc and Electricity by the end of 2018." However, in actual work, the above treatment was not implemented.

It should be noted that in March 2024, Luoping Zinc and Electricity issued an announcement showing that the company received a "Notice of Suspension of Production" issued by the Luoping County Emergency Management Bureau because the validity period of the company's Fule Lead-Zinc Mine Safety Production License was from March 7, 2021 to March 6, 2024, and it has now expired. According to relevant laws and regulations, all production activities will be suspended from now on, and production can only be resumed after the extension procedures are approved.

Historically, the Fuller Lead-Zinc Mine has been shut down several times.

In May 2021, Luoping Zinc and Electricity announced that a roof collapse accident occurred at the Fule Lead-Zinc Mine on May 2, 2021, resulting in one person being injured and later died on the way to treatment. The Fule Lead-Zinc Mine was ordered to stop production immediately.

In November 2022, Luoping Zinc and Electricity announced that due to the expiration of the mining license of the Fule Lead-Zinc Mine (valid until October 30, 2022), in accordance with relevant laws and regulations, the regulatory authorities required the company's Fule Lead-Zinc Mine to stop all mining activities from now on and resume mining after the mining license is processed.

As a result, in the past three years, Luoping Zinc and Electricity's Fule Lead-Zinc Mine has stopped production three times due to accidents and license expiration.