Environment Forum

U.S. metals firm in row with Peru’s government

By Madelyn Fairbanks

U.S.-based company Doe Run Peru and the government of President Alan Garcia are locked in a dispute over how to balance environmental health with saving thousands of jobs at the company’s La Oroya metals smelter.
La Oroya, high in the Andes east of Lima, has been called one of the most contaminated places in the world by the Blacksmith Institute, but it is a top 10 metals exporter in Peru and the economic engine of the central region of the country.

The smelter has been shut down since June after banks worried about plunging metal prices cut credit lines, strangling not only the plant’s ability to buy mineral concentrates for its refinery, but cutting off its ability to pay back other debts. Workers are restless and environmentalists are worried.

Doe Run’s parent company, U.S.-based Renco Group, bought the smelter from Peru in a 1997 privatization auction. The smelter opened in 1922. At the time of the privatization, Doe Run said it would scrub the smelter, while the government said it would mitigate decades of pollution that dusted the town’s hills before Doe Run came to town.

Renco’s CEO Ira Rennert, also owns refineries in the U.S. His company is now arguing with the government about extending an October deadline to finish the smelter cleanup. Getting an extension would allow it to tap loans again.
A 2005 study from St. Louis University indicated that 97 percent of children between 6 months and 6 years of age in the town of La Oroya have toxic levels of lead in their blood. The smelter is the town’s main source of employment.
Critics say the company should have done more to cut air and water pollution before the global financial crisis, when Doe Run Peru and its American parent company had robust profits.
In the meantime, workers at Doe Run threaten to block off area roads starting August 31 if a cleanup extension from Garcia is not given.

Peru clashes raise green issues

Clashes in the Amazon between indigenous protestors and Peru’s army that killed some 60 people last week throw some old issues into sharp new relief: development versus the environment and local versus foreign control of natural resources.

Indigenous tribes, worried they will lose control over natural resources, have protested since April seeking to force Peru’s Congress to repeal new laws that encourage foreign mining and energy companies to invest billions of dollars in huge tracts of pristine rain forest.

In the developing world, extractive industries have a bad record of bringing benefits to local people. Prime examples include the oil-rich Niger Delta in Nigeria and mineral-rich South Africa under apartheid.