Thursday, September 18, 2008

China Milk Scandal Widens as Melamine Found in Yogurt

By Lee Spears and Dune Lawrence

Sept. 16 (Bloomberg) -- China's tainted milk scandal widened as melamine was found in products of a second dairy company, after infant formula contaminated by the chemical was linked to 1,253 cases of infant kidney stones, killing two.

Wellcome, a supermarket chain owned by Dairy Farm International Holdings Ltd., said it will stop selling ice cream made by Inner Mongolia Yili Industrial Group after the chemical was found in a sample, according to a statement sent by e-mail late today.

The discovery in Hong Kong of the industrial chemical in a second company's products boosts concerns that contamination may be widespread after the Ministry of Health said melamine-tainted milk made by Sanlu Group Co. sickened children. Milk powder produced by 22 Chinese dairy producers, including Sanlu and Yili, were found to have melamine, China Central Television reported late today.

``There should be more and reliable testing laboratories established where you can check these products,'' Joerg Wuttke, president of the European Chamber of Commerce in China, said today in a phone interview from Brussels. ``This is a severe weakness.''

Sanlu, 43 percent owned by New Zealand's Fonterra Cooperative Group Ltd., apologized to consumers and promised to recall all milk powder produced before Aug. 6, Xinhua News reported late yesterday.

Hu Liping, board secretary of Yili, wasn't immediately available for comment when called after office hours today. Calls to different phone numbers at the company weren't picked up.

Melamine can make the protein level in dairy products appear higher than it is. The chemical, used to make plastics and in tanning leather, was found in exported pet food last year and blamed for killing thousands of cats and dogs in the U.S.

`Natural Choice' Yogurt

Hong Kong's Food and Environmental Hygiene Department found melamine in Yili's ``Natural Choice Yogurt Ice-bar with Real Fruit,'' Wellcome said in its statement. The supermarket operator said it will stop selling all Yili brand ice cream as a precaution.

Other products made by the dairy company will still be for sale, according to Annie Sin, Wellcome's marketing and communication manager. Wellcome had sold Yili ice cream products in some of its more than 250 stores in Hong Kong, Sin said.

People who answered the 24-hour hot line of the Food and Environmental Hygiene's Center for Food Safety in Hong Kong said no statement had been issued and that they couldn't comment.

Fonterra Recall

Separately, Fonterra recalled one batch of prenatal milk sold in China under the Anmum Materna brand name, according to a statement sent by e-mail today. The batch was manufactured under license by Sanlu using local raw milk that may have been contaminated and sold only in China, according to the statement.

All other batches of Fonterra's Anmum and Anlene products were produced using milk imported from New Zealand, the company said. A media officer who returned a message at Fonterra's 24-hour media line said the batch recalled was 11 metric tons.

China announced an investigation into Sanlu's infant formula last week after reports of a rash of cases of kidney stones in infants in at least seven provinces. The company has since admitted that it knew of the contamination in early August, more than a month before the public recall issued last week.

The Ministry of Health ordered the recall of products made by the 22 dairy companies that produced milk powder found to contain melamine, China Central Television reported, citing the latest findings in the government's investigation.

Two more men were arrested in China for allegedly adding melamine to milk, bringing to four the number of people arrested in relation to the scandal. The two milk dealers, who supplied Sanlu, were arrested early today, according to a statement from the Hebei Province Public Security Bureau.

Yili's shares fell to the lowest in more than two years in Shanghai trading, which closed for the day before Wellcome sent its statement. Yili fell 6 percent to close at 13.43 yuan, the lowest since March 2006.

To contact the reporter on this story: Lee Spears in Beijing at

Last Updated: September 16, 2008 10:28 EDT