MAC: Mines and Communities

Peru Prepares To Rule On Cleanup Extension Requested By U.s. Owned Smelter

Published by MAC on 2006-05-21


Peru prepares to rule on cleanup extension requested by U.S.-owned smelter


21st May 2006

LA OROYA, Peru - Yanina Gabriel's son started kindergarten this year, but she says the prospects for his educational future are as bleak as this smoke-choked town that shares its air with a U.S.-owned metal smelter.

"My little 5-year-old boy has been diagnosed with a high level of lead in his blood," the 24-year-old said. "The teachers have already said he won't be able to pay attention as normal children do."

"We are always coughing, with constant stomach pain, and eyes hurting," said Gabriel, standing on the porch of her adobe house, overlooking the smelter that dominates this Andean town. From the smoke stack, a dusty cloud containing lead, sulfur dioxide, cadmium and arsenic billowed into the sky.

Peru's government says it plans to announce soon whether to grant the privately held, St. Louis-based Doe Run Co.'s request for a three-year grace period to complete a sulfuric acid treatment plant. Demanded by Peru's Ministry of Energy and Mines, the plant would lower sulfur dioxide emissions.

The ruling had been scheduled for Friday, but ministry spokesman Rolando Martinez said officials decided to "push back the date for a few days because they're still evaluating" Doe Run's request.

The extension request has caused a firestorm of debate in Peru, with environmental groups and several lawmakers leaning heavily on regulators to deny the extension.

Doe Run officials say the company needs more time and that the environmental upgrades will cost nearly twice its original commitment. Many residents - including La Oroya's mayor - support a time extension, fearful of driving away the company and its jobs.

But Eliana Ames, coordinator of a grass-roots organization in La Oroya, said Peru's government should deal harshly with the company.

"They have the money to fulfill the pollution reduction but don't want to spend it," she told The Associated Press.

Her organization has called for Peru to cancel Doe Run's contract and look for another company to replace it. But that might not be necessary.

Doe Run's auditors last March expressed "substantial doubt" about the viability of its Peruvian operations in an annual filing with the U.S. Securities and Exchange Commission.

The report to the SEC said heavy debt and the cost of curbing pollution in La Oroya could force the company to default on bank credit agreements.

Doe Run agreed to improve the facility - which produces copper, lead, zinc and smaller amounts of gold, silver and other metals - when it purchased the 82-year-old smelter in 1997 from state-owned Centromin, which ran the plant from 1974.

But in late 2004, the company threatened to close its operations if the government did not grant more time to complete environmental upgrades.

Peru gave in, but said in February that any extension for the company would not exceed three years. Doe Run had hoped for at least four.

Doe Run has said it would comply but noted it will have to invest nearly $200 million for environmental projects, more than the $107 million it originally agreed to.

"The requirements are greater," said Juan Carlos Huyhua, general manager of Doe Run Peru. "They are demanding air quality standards and we're working on it."

The company says it has invested more than $140 million to reduce lead emissions from the main stack by more than 28 percent since 1998, and reduced worker blood lead levels by more than 34 percent since 1997.

Other statistics reflect a different reality: More than 99 percent of nearly 800 children aged 6 and under living near the smelter had blood lead levels that still exceeded international standards, according to a study in late 2004 by the company and health authorities.

In December, a team from the Saint Louis University School of Public Health found cadmium, known to cause kidney failure and lung and prostate cancer, was six times higher than normal U.S. levels. Elevated levels of antimony, arsenic, cesium and other toxic substances also were found in the bodies of La Oroya's residents, their study found.

Doe Run's environmental troubles are not limited to Peru.

The company has been ordered by the U.S. government to clean up pollution at its Herculaneum, Missouri, smelter - the largest in the United States - which has repeatedly failed to meet federal air quality standards for lead.

Perry Gottesfeld, executive director of the San Francisco, California-based environmental group OK International, said Doe Run is asking for permission to discharge 11 times more lead in La Oroya than it does from its Herculaneum facility.

"What Doe Run has shown is that they are willing to pollute at much greater levels in Peru," Gottesfeld said.

The company did not respond to repeated requests for comment on Gottesfeld's analysis.

A sulfur stench hangs in the air in La Oroya, wedged in a narrow gorge in the Andes about 90 miles east of the Peruvian capital of Lima. Steep rocky slopes that hem in the town and trap the smelter fumes are stained yellow from acid rain.

Still, most residents here are in favor of granting extra time to Doe Run to clean up its act, fearing the impact of some 3,500 lost jobs if the company leaves.

La Oroya's mayor, Clemente Quincho, led a march Tuesday of 3,000 residents to block Peru's central Andean highway, demanding the extension be granted.

"The company will carry out new projects to improve our quality of life," Quincho said, insisting that 90 percent of the town's 30,000 people support the company.

Resident Elizabeth Quispe, 32, responded: "It's all the same if the smelter stays or goes. What I want is to stop living in this hell."

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