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  HOME | Peru

Peru Says Doe Run Failed to Show Proof It Can Restart Operations

LIMA – Doe Run Peru has not submitted documents that prove it has the necessary financing in place to restart operations at its La Oroya metallurgical complex by a July 27 deadline, Peru’s Energy and Mines Ministry said Friday.

A ministry statement said the firm – owned by the Renco Group, a U.S.-based holding company – was required to show that it had financing for an environmental remediation program, which is due to be completed by 2012 after the an initial deadline was extended.

It said the company also failed to show evidence that it has secured commitments from suppliers of mineral concentrates and reached debt-settlement agreements with creditors, among other requirements.

On Tuesday, the ministry gave Doe Run 48 hours to provide the information, but company executives said Friday they still did not have the documents, the statement added.

If those documents are not submitted and operations are not restarted by next Tuesday’s deadline, the government could begin the process of shutting down the company’s operations in Peru, as Energy and Mines Minister Pedro Sanchez has warned repeatedly.

Such a move would risk the jobs of Doe Run Peru’s 2,500 workers, although the Labor Ministry said Friday it has a plan in place to relocate the company’s workforce if operations are not restarted.

“We already submitted the corresponding plan yesterday (Thursday) in case Doe Run does not restart operations on July 27,” Labor Minister Manuela Garcia told the official Andina news agency.

“Different criteria are being evaluated for the plan, such as the number of workers, their labor status, the age of these people,” Garcia said.

Under the Labor Ministry’s proposal, Doe Run’s workforce would have access to a government-sponsored re-training program.

Doe Run Peru has operated the La Oroya smelter – which is located in Peru’s central highlands and produces lead, zinc, copper, silver and gold, as well as byproducts such as sulfuric acid and indium – since 1997 and the Cobriza copper mine in the south-central Huancavelica region since 1998.

Amid the global financial crisis, Doe Run Peru was forced in June of last year to pare back its operations to a minimum, saying it lacked sufficient funds after a group of foreign banks had cut off its credit line a few months earlier.

The company also was expelled earlier this year from the National Society of Mining, Petroleum and Energy, a trade association, over failure to complete its environmental-remediation program, or PAMA.

Doe Run Peru has carried out roughly half of the clean-up work, but must invest another $160 million to finish the job in La Oroya, one of the world’s most polluted places

Workers in La Oroya have held several protest marches in recent months, including shutting down traffic on a busy highway, to demand the resumption of mining operations.

Last month, Doe Run called on the Peruvian government “to honor specific contract terms that will enable the company to resume operations” in La Oroya.

Doe Run said that because it bought the smelter in 1997 it should not be held liable for environmental damage that occurred prior to that year.

The company also expressed concerns over air-quality standards that it says can only be met “upon the completion of the PAMA projects.”

The company also wants the government to give it more time to pay “additional taxes which the company is currently contesting,” levies that the government estimates amount to 700 million soles ($248 million). EFE

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