La Oroya: “Peru’s Chernobyl” to stay closed —for now

Laid-off workers from the Doe Run Peru metal smelting complex—closed due to toxic pollution—held a protest in front of the Labor Ministry in Lima April 19 to demand that Peru’s government save their jobs by allowing the plant to re-open. The rally came in response to a decision April 11 by the smelter’s creditors—including the Peruvian state, due to numerous unpaid fines—to reject a restructuring plan from Doe Run Peru, a unit of Missouri-based Renco Group, casting doubt on the future of the idled complex at La Oroya, in Junín region. Once one of the largest smelters in Peru, it has been shut since 2009 due to insolvency and a stalled environmental clean-up plan. A May 1 deadline for the company to come up with an acceptable clean-up plan—officially dubbed the Environmental Adjustment and Management Program (PAMA)—has been pushed back to June by the Ministry of Energy and Mines. But the case is now mired in multiple lawsuits—and the local community at La Oroya is bitterly divided.

Doe Run Peru in February brought suit against Peru’s government before the National Institute for the Defense of Competition and the Protection of Intellectual Property (INDECOPI), demanding that the state be removed from its list of creditors. Doe Run Peru already has an outstanding $800 million suit against the Peruvian government filed last year before an investment arbitration tribunal established by the US-Peru Free Trade Agreement. The company charges Peru with violating FTA equal-treatment clauses, and wants the Peruvian state to take responsibility for third-party claims and the costs of litigation filed against Renco in US. (Oxfam, April 20; Reuters, April 19; Andina, April 4; La Republica, April 3; Peru This Week, Feb. 27)

The smelter was originally built in 1922 by the Cerro de Pasco Corporation, and was expropriated by Peru’s government in 1974, with ownership transferred to the state-owned company Centromin. As part of Doe Run Peru’s 1997 privatization agreement, the government agreed to assume responsibility for third-party claims related to contamination in La Oroya until the company had completed its environmental clean-up program. Attorneys for local residents have sued Renco and its affiliates in Missouri state court, seeking damages for exposure to lead, heavy metals and toxins. Peru, in turn, argues that the company has acted in bad faith by failing to come up with an acceptable PAMA.

With many local campesinos demanding the complex remain closed, Doe Run Peru workers are demanding its immediate reopening. On April 4, workers blocked the Central Highway connecting Junín region to Lima, cutting off land access between the capital and the entire central Andean region, backing up traffic for miles. (RPP, April 5; MineWeb, April 4)

According to a reports by the environmentalist Blacksmith Institute (PDF), La Oroya is one of 10 most polluted places on earth. The man behind Renco Group, billionaire investor Ira Rennert, has faced such controversies before. In the late 1990s when his huge magnesium production facility in Utah was ranked by the US Environmental Protection Agency as number one on its Toxic Release Inventory. Later, his magnesium company went bankrupt, potentially leaving taxpayers with the bill for cleaning up an 84-square-mile complex near the Great Salt Lake. Rennert’s $170 million mansion on Long Island is said to be the largest private residence in the United States. (Friends of the Earth Economics for the Earth blog, April 16 via UDW)

See our last posts on Peru and the interplanetary mineral cartel.

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