(Adds death of one baby)

By Andrew Torchia

SHANGHAI, Sept 13 (Reuters) - China reported a first death on Saturday in a scandal over contaminated milk powder which it blamed for causing kidney stones and making 432 babies fall ill.

Sanlu Group, a dairy producer partly owned by New Zealand dairy giant Fonterra Co-operative Group, has been ordered to halt production after a preliminary investigation found its products were responsible, officials said.

Nineteen people have been detained on suspicion of breaking food safety laws, and 78 have been questioned, said Yang Chongyong, vice governor of the northern province of Hebei, where Sanlu is based.

"This is a severe food safety accident," Gao Qiang, a senior official at the Ministry of Health, told a news conference called by the cabinet's information office in Beijing.

The official Xinhua news agency reported that one baby had died because of the contaminated powder.

More than 8,000 tonnes of baby formula have been pulled off shop shelves, and authorities are checking supplies and companies producing milk powder around the country, officials said.

The cabinet pledged to give free medical treatment to infants made ill by the contaminated powder, and asked health workers to fan out to remote rural areas to find ill babies in time for them to be treated, Gao said.

KIDNEY STONES

Sanlu admitted this week that its baby formula had been contaminated with melamine, a toxin linked to the deaths and illness of thousands of pets in the United States last year.

Authorities believe suppliers of milk to Sanlu may have diluted the milk with water and then added melamine, a substance used in plastics, fertilisers and cleaning products, to make the milk's protein levels appear higher than they were.

Sanlu's tainted powder was sold only in China, except for a small proportion which was exported to Taiwan for food processing, Gao said.

Kidney stones, a rare complaint in infants, are small, solid masses that form when salts or minerals normally found in urine crystallise inside the kidney.

Officials told Saturday's news conference that Sanlu had received complaints about the powder in March and confirmed the problem, recalling some of its production. But it did not report the problem to the government or the public, the officials said.

"Sanlu Group should take a large part of the responsibility in this case," Gao said.

A woman who answered the telephone in the marketing department of Sanlu's headquarters on Saturday said she could not comment. She declined to give her name, and calls to other departments of the company were not answered.

Chinese officials have notified the World Health Organisation and authorities in Taiwan, Hong Kong, Macao and New Zealand of developments in the investigation, Gao said.

The Chinese public reacted to the milk powder scare, the latest in a series of food safety scandals over the past several years, with anger and fear.

"Why do these things which bring disaster to the country and people around us? They are all infants. It's inhuman," read one anonymous posting on popular website Sina.com.cn.

Another read, "How can we trust domestically made milk? What kind of milk should we buy?"

In 2004, at least 13 babies in the eastern province of Anhui died after drinking fake milk powder that investigators found had no nutritional value. The scandal prompted government efforts to strengthen monitoring of food safety. (Editing by Mark Trevelyan)

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