MAC: Mines and Communities

With Smelter Shut, Peru Mulls Zero Tariff On Lead

Published by MAC on 2009-11-02
Source: PlanetArk

Lima: Peru's government is weighing whether to eliminate the import tariff on lead as the country's only smelter that processes the metal is shut, squeezing local supplies, an industry group said on Tuesday.

The National Industry Society (SNI) has asked the Finance Ministry to scratch the 9 percent tax on refined lead and said the move is necessary so long as Doe Run Peru's La Oroya smelter remains closed.

La Oroya has been shut since June because of financial and environmental troubles. Peru ranks No. 4 in lead output globally.

Doe Run has said the smelter should reopen by January, but the start date has been pushed back once already and officials at SNI said they can't wait.

"There's a supply shortage because of this problem (at Doe Run)," said Malena de Silva of SNI's chemical committee.

"Doe Run is the only company that produces this sort of refined lead," she said.

According to the mining ministry, La Oroya processed 114,259 tons of lead last year -- or roughly a third of the country's total output. This year, the smelter has churned out just 26,082 tons.

Peruvian companies consume around 12,000 tons of refined lead annually, according to SNI, to manufacture products such as paint, plastics and piping.

Finance ministry officials declined to talk about a pending request.

Prices and Pollution

Lead prices, which have more than doubled this year, spiked last month when authorities in China shut several smelters after children tested positive for high levels of lead in their blood.

China produces more than a third of the world's lead supply.

For miles around the La Oroya plant in Peru, elevated levels of lead can be found 4 to 5 inches into the topsoil -- the result of decades of contamination. Many children in the area have high levels of lead in their blood, according to government data.

Doe Run Peru, a unit of the U.S.-based Renco Group, halted work at the smelter earlier this year after banks cut its credit.

It has said it could regain access to loans and restart production if the deadline on its environmental cleanup program were extended.

The Peruvian Congress voted last month to give the company a 30-month extension on its cleanup, which previously it was required to finish by October.

Some 20,000 jobs are at stake in and around the smelter.

(Editing by Lisa Shumaker)

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