RIOT police took over a chemical factory in western China after hundreds of workers attacked protesters demonstrating against the illegal disposal of toxic waste, it was revealed yesterday. The clash in Lanzhou, the capital city of Gansu province, resulted in the deaths of two men and left more than a dozen people injured, the Guangdong-based Nanfang Weekend reported. It quoted sources as saying the incident had ''shocked'' the central Government. Gansu provincial governor Yan Haiwang, who arrived on the scene to order the rescue operation, said: ''This incident should never have happened.'' The bloody confrontation on August 14 between workers from two plants was the culmination of a dispute that first flared last November, when Maquan village, just upstream of Factory 471, set up the Lanquan Chemical Factory to produce sulphuric acid. Waste discharged from the plant into the Yellow River soon contaminated local air and water supplies, causing a ''rotten-egg stench'' which forced 20,000 to 30,000 people in the vicinity to stay at home. The report claimed that instances of respiratory illness increased, wildlife disappeared and livestock began dying after the waste was discharged. Nanfang Weekend said people in Factory 471 found the environment increasingly intolerable during June and sent water samples to provincial authorities for testing. It was found to be undrinkable and to pose a health hazard. The results led to an early clash involving several hundred people. Three people were hurt. After Factory 471 protested, the Lanzhou authorities told the chemical plant's management on at least two occasions to halt production. But the instructions were ignored. The August 14 clash began a few days earlier when hostilities between the two sides flared up. Armed with clubs, pitch forks and spades, about 300 to 400 workers from the Lanquan Chemical Factory attacked Factory 471, which was the country's ''top secret nuclear industry plant'' before it turned to civilian production in the 1980s, the report said. In the 20-minute battle, two people were killed and more than a dozen seriously injured. Hours after the clash, hundreds of riot police stormed the Lanquan Factory and imposed martial law, which was still in effect, the report said. Nanfang Weekend said the Lanquan Chemical Factory had blatantly violated the laws on environmental protection. ''Furthermore, this section of Yellow River has been classified as a Grade A conservation zone by the central Government. Lanquan Chemical Factory has discharged toxic material in the stream. Wasn't it a deliberate violation of law?'' it asked. The newspaper said the complaints by Factory 471 workers were reasonable.