Xinhua said around 100 policemen were deployed to the scene on Sunday in the latest sign of growing anger over China's rampant industrial pollution.
On Tuesday the mayor of Baoji city, Dai Zhengshe, apologised to residents living near the factory, vowing it would not be allowed to open again until it meets health standards, Xinhua said.
Villagers were enraged by the plant's apparent defiance of an August 6 order from environmental authorities to suspend operations, Xinhua said.
At least 615 out of 731 children in the two villages near the Dongling smelter have tested positive for lead poisoning, which can damage the nervous and reproductive systems and cause high blood pressure, anemia and memory loss.
| Local officials say they are planning to relocate families living near the plant [AFP]
Lead levels in some of the children were more than 10 times the level considered safe by Chinese authorities.
Xinhua said air quality tests done near the smelter showed unusually high levels of lead, although officials say groundwater, surface water, soil and company waste discharge all meet national standards.
The agency quoted a local environmental official as saying lead content in the air near the plant was 6.3 times above that measured at other sites in the region.
Local officials have said they plan to relocate all 581 households living within 500 metres of the factory in the next two years.
China's breakneck economic development has left much of its soil, air and waterways dangerously polluted, and environmental showdowns with outraged residents are growing.
Authorities routinely pledge to close down polluting industries, but often back down because of their importance to the local economy.