Since the scandal broke reports have indicated that more than 500 people have been poisoned by cadmium, with five deaths. But more are expected since only 2,888 residents were tested from a radius within 1.2 kilometres around the factory. In reality the contaminated area is much wider.
As a result of the pollution local farmland has become unfit to grow crops leaving residents without the means to earn a living.
But instead of helping the affected population the authorities have been trying to hide the scandal. At least eight journalists investigating the matter were taken away in a country that has been following developments in the matter, wondering how it could happen.
Liuyang mayor and township officials visited families in Shuangqiao village, the site of the factory, late on Monday to persuade them not to stage any public protests. Long hours of persuasion and intimidation worked for the moment, stalling the proposed protest, but villagers are still afraid that they will be forgotten by the government.
For years Xianghe claimed that it produced zinc sulphate when in fact it was churning out cartloads of indium, a key metal for making liquid crystal displays (for computers, television, mobile phones, etc.) and solar panels.
The metal is highly toxic and production requires a special permit for careful waste disposal. Yet the local Environmental Protection Bureau never lifted a finger to stop production. Instead it claims that indium was produced for only a brief period in 2006, and that the factory stopped refining the metal after being warned by the bureau in February 2007.
Workers employed at the factory have a different story to say. They told the South China Morning Post that the plant secretly produced indium from day one in 2004 until it was closed last June. Lun Shenqiao, who worked in the factory, explained that management was forewarned of pending inspections two weeks in advance and could thus hide indium production or switch to something else.
As a result of the scandal, former Deputy Township chief Xiong Zanhui was arrested, accused of taking bribes of 100,000 yuan from the plant owner in exchange for government support and help in the cover-up. Plant owner Luo Xiangping and four other senior factory managers were also detained.
Residents note that indium output was too high for just a few officials to cover up. They insist that they had already presented several petitions to the authorities about what it was doing. The company itself was fined 200,000 yuan for breach of regulations rather than shut down because it had promised it would take corrective measures.
In a recent letter the environmental protection bureau was still defending the factory's operations, saying that it had spent 7 million yuan to build waste treatment facilities and that water samples taken from nearby areas showed "no signs of pollution.”
About 30 per cent of the annual worldwide demand for indium is met by China. Indium prices surged from less than US$ 600 per kilogram in 2003 to US ,000 by 2006. Because of this rise Xianghe Chemical increased its output to 300 kilograms a month, bringing in up to 7,000 yuan (US$ 1,000) per month for the plant owner.