Peru to possibly give Doe Run more time for La Oroya cleanup, workers lift strike for 30 days

The La Oroya smelter workers decided late Wednesday to lift their strike, giving the government and Doe Run 30 days to offer them acceptable solutions. Police and workers joined forces late into the night to clear rocks from the highway and roads around the smelter town. The strikers had blocked all traffic to and from the central highlands for several days.

Earlier in the day, Peru’s Labor Minister said that the government may give financially troubled Doe Run “a reasonable extension” to finish the environmental cleanup plan for La Oroya, scheduled to be completed by October, reported Radio Programas, RPP. Over the past several months, the government had refused to consider an extension.

“The government is prepared to grant Doe Run a reasonable extension,” said minister Jorge Villasante.

On Tuesday, the minister of Energy and Mines harshly criticized Doe Run Peru and rejected calls to take over the financially troubled company as 3,500 temporarily laid-off miners continued to block the Central Highway at La Oroya, the main access route to Huancayo and the Chanchamayo valley.

Doe Run is taking the problem to a point of no return, said Energy and Mines minister Pedro Sánchez, by not complying with what was agreed, including the capitalization of its debt and the cleanup of La Oroya. Sanchez rejected calls made by the La Oroya union for the government to bail out the company to save their jobs.

“An intervention by the government would be very complicated in terms of responsibilities and financial consequences,” added Sanchez in comments to Radio Programas, RPP. “It’s very probable that, given how things are, we could face international court cases.”

The government’s attitude is a “shame,” said the secretary general of the Doe Run Workers’ Union, Luis Castillo. “The workers are not to blame for anything. There has been bad management and, especially, irresponsibility on the government’s part for not properly monitoring Doe Run. Why do the workers have to be caught in the middle of this mess?”

Although St. Louis-based Doe Run has reportedly postponed “for a few days” the temporary lay-off of their approximately 3,500 workers, originally scheduled for 90 days to start on June 22, the Labor Ministry reported that “the company never announced it would suspend its activities.”

The metallurgical complex of La Oroya run by Doe Run Peru — part of the Renco Group — has been operating sporadically since March. A consortium of banks led by PNP Paribas withdrew a $75 million revolving line of credit, and Doe Run was then unable to buy the concentrates it needs for its smelter.

In early April, ending weeks of speculation of a government bailout, fifteen Peruvian mining companies dependent on Doe Run Peru’s smelter extended the U.S.-owned mining company a $175 million credit line, if the company met two specific conditions. But, according to Carlos Gálvez, general manager of Buenaventura Mining Co., neither Doe Run Peru nor the Renco Group are “complying with what was agreed to,” and have put the financial bailout at great risk.

First, the Renco Group must inject $165 million into Doe Run Peru to compensate for a financial shortfall. And second, Doe Run Peru must pledge the totality of its shares to the Peruvian government – which recently gave Doe Run yet another extension – to prove that it will comply with an environmental cleanup plan at La Oroya, a city which has been dubbed “Slow Chernobyl” for the pollution generated by the smelter.

In 2004, after an environmental impact study and government inspection records indicated that the concentrations of lead, sulfur dioxide, and arsenic in La Oroya’s air had increased, the corporation asked the Peruvian government for a four-year extension to the smelter’s environmental management plan. Then, this year, the company asked for another extension, and the government agreed to set 2010 as the new tentative date by which Doe Run must meet the terms of the environmental cleanup plan to which it agreed more than 10 years ago when it acquired the smelter from the Peruvian government.

The smelter, built and operated by the Cerro de Pasco Corporation since 1922 and nationalized in 1971 by Peru’s military government led by General Juan Velasco, has always been a serious polluter. Doe Run acquired the operation in a privatization program during the Fujimori administration when the winning bidders, Industrias Peñoles of Mexico, backed out.

At the time, the government recognized the complicated aspects of the privatization due to environmental and social concerns – the environmental damage in La Oroya was so severe that Rio Tinto, a large British mining company, decided it was not worth buying. The privatization package required that the new owners would have to invest at least $132 million over the first five years and up to $330 million over ten years to bring the refinery complex up to environmental standards required by law.

As part of the purchase agreement signed in 1997, Doe Run agreed to comply with a 10-year environmental cleanup and management plan, or PAMA.

According to Doe Run Company’s subsidiary, Doe Run Peru, it has invested over $132 million in environmental improvement projects since they began operation in 1997. A January 2007 independent audit of their plant found they were meeting Peru’s emissions standards.

But an independent scientific study released by “Revive El Mantaro” in November 2007 still found alarming lead concentrations in and around La Oroya in comparison with international standards. Huancayo’s archbishop, Mons. Pedro Barreto, told La República that “mining companies should comply with international environmental standards, rather than national ones, which are beneath the dignity of the Peruvian people.”

The poly-metallic smelter and refinery complex has been spewing clouds of toxic lead, copper, zinc and sulfur dioxide-filled smoke for more than 80 years. In the valley, where the surrounding limestone mountains have been stained black and burned bare of vegetation by acid rain, 99 percent of children have dangerously high blood lead levels. The city, which lies 3,300 meters, or nearly 11,000 feet, above sea level, was named one of the ten most polluted places in the world by the Blacksmith Institute in 2006 and 2007.

Sulfur dioxide emissions from the U.S.-run Doe Run smelter sometimes reach 10 times the amount considered acceptable by the World Health Organization, or WHO, and the annual mean concentration exceeds this level by a factor of two or three. And, last August, record-breaking levels of sulfur dioxide were detected.

In La Oroya – where the majority of the town’s residents depend directly or indirectly on the smelting complex – Doe Run, which claims to have spent more than $6.5 million on social programs, contributes to municipal and community soup kitchens and public showers, and organizes brigades of volunteers to sweep up the toxic dust laden streets.

“The company has carefully crafted a strategy to muddy its responsibility,” according to the Inter-American Association for Environmental Defense, AIDA.

“The city’s schools and even the police station are painted Doe Run’s corporate colors, green and white, and kids wear Doe Run sweat shirts,” reports AIDA, “and a company-organized platoon of volunteer ‘environmental delegates’ cleans the streets, goes door to door dispensing hygiene tips, and organizes public hand-washing sessions for children, who get smiley-face stickers when they complete the task.”

Although Doe Run has cleaned up the river and made important improvements over the conditions found when it bought the refinery company (other potential bidders backed out because of the costs involved), the major solution would be a billion-dollar emissions filter system, which Doe Run says it cannot afford, and to move the whole town of La Oroya to an adjacent valley. Although the government began to build housing away from the La Oroya, it was a half-hearted attempt and therefore never came to anything.

In the United States, Doe Run was forced by the federal government to implement a multimillion-dollar emergency cleanup plan in Herculaneum, Missouri when the US EPA and the Missouri Hazardous Waste Program revealed high levels of lead, arsenic, cadmium and other metals in the air, soil and groundwater. The pollution was from Doe Run’s lead smelter, the largest in the US. As part of the program, the federal government relocated nearly 100 households.

“The difference is that the US EPA has forced Doe Run to take action in the US while no strong government authority exists to advocate for environmental and health protections in Peru,” reports AIDA.

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