Two iron ore suppliers under China Minmetals Corporation (CMC) in Wu'an, Hebei province, have been blamed for discharging waste and polluting environment, Xinhua News Agency reported.

The dispute is about tailings, materials left over after separating the valuable from the worthless material in ore.

The tailings in question are discharged by two iron ore suppliers - Beiming River Iron Ore and Yushiwa Iron Ore - which are owned and operated by the Hanxing subsidiary of CMC, a major State-owned metals and minerals trader, the report said.

The ore operators started to build a tailing reservoir for effluents in 2003 and began to discharge waste into the reservoir in October 2007 before they got the work safety license from the local work safety authority in August 2008.

The ore operators can discharge tailings into a reservoir only after they get a work safety license, Huang Yi, spokesman of State Administration of Work Safety, was quoted by the Economic Observer as saying.

But the tailings reservoir was blamed for the flooding that allegedly led to the shutdown of another iron ore company Jinxiang, which filed a lawsuit against the two CMC companies in July last year.

CMC companies then stopped discharging waste to the reservoir. Instead, the Beiming River ore company discharged effluents into the Beiming River in Gaocun village, and Yushiwa ore company put waste into a valley in Jianshan village in March, even though they were ordered to solve the problems.

Zhang Wenxue, deputy head of CMC's Hanxing subsidiary, defended the discharges, saying the two iron ore producers made the discharges at the request of local governments to help the two villages create new land with layers of tailings in the water basin.

Zhang said the companies had signed agreements with the villages.

Beiming River Iron Ore had agreed to pay 1.6 yuan to Gaocun village for each cu m of tailings discharged. Yushiwa Iron Ore would pay 80,000 yuan a year to Beijianshan village for discharging tailings in the valley.

Zhang showed a document to Xinhua, which 83 officials, Party members and Gaocun villagers had allegedly signed to support the river beach land reclamation plan.

However, the document was dated Oct 16, the day after a media report from the Economic Observer exposed the tailings problems.

The CMC responded the next day and dismissed the report as "untrue".

An anonymous official at the government of Wu'an was quoted by the paper as saying that they knew about the two ore companies' illegal operations, but they were not able to control it because the ores are owned by a big State-owned enterprise.

Tailings were still being discharged into the river when reporters visited the village in late last month.

"Because iron ore tailings have been blown everywhere in the village, many villagers, especially children, have skin problems. It's very itchy," Pang Qingru, a resident in Gaocun village was quoted by Economic Observer as saying.