A subsequent investigation by the Chinese authorities found that safety was extremely lacking at the plant, with the direct cause being inappropriate use of substandard equipment. The investigation also concluded that the various other safety failings at the facility were contributing factors. The report went on to criticise safety across the Chinese steel industry.
Sun Huashan, deputy head of the State Administration of Work Safety, said that it was "the most serious accident to hit China's steel industry since 1949."
The Qinghe Special Steel Corporation , established in 1987, In 2006, the factory produced 70,000 tonnes of steel and had hoped to increase production to 120,000 tonnes in 2007. The ladle which failed carried molten steel from a blast furnace to other processes, and had a diameter of two metres and a capacity of 30 tons of liquid steel. It ran on a rail at a height of three metres above the factory floor. The official Xinhua press agency also released a report stating that the ladle fell on workers below, but this was unclear as in to whether the workers were in fact crushed or whether this, too, conflicted with the other reports.
The Chinese authorities immediately launched a full investigation into the disaster, The factory itself was sealed off for the course of the investigation, a common practice in China, but work continued in the site office.
The investigation concluded that the direct cause of the disaster was Qinghe using a standard hoist instead of one specifically designed for dangerous smelting work. Other contributing factors identified were lax safety measures and "chaotic" management. The official report also stated that "Equipment and materials inside the workshop were messy, the work space was narrow, and safety passages did not meet requirements."
The report goes on to say that the accident highlights poor working conditions and safety measures in the Chinese steel industry, "Some firms cannot adapt to the demands of rapid expansion and ignore safety... Safety inspection is not in place, leading to multiple accidents." and concluding "Work safety conditions in the metallurgy sector are extremely grim,".
The bodies of the deceased were too badly burned to be recognisable, so DNA testing was used for identification. Within 24 hours of the disaster, officials had arrested the plant's owner and three employees who were in charge of work safety issues, and had promised the families of the victims a minimum of 200,000 yuan each in compensation. According to ''Xinhua'', the positions of those arrested were the manager of the mill, an operator, a technician and a workshop supervisor. The same statement from the work safety administration as had issued the conflicting injury count stated that those responsible were "under control" but did not elaborate further.