Doe Run Peru Shut 100% of Zinc Smelter Operations (Update2)
bloomberg.com
By Alex Emery
June 2 (Bloomberg) -- Doe Run Peru shut all its smelter operations after failing to reach an agreement with banks and mining suppliers, a union official said today.
The company, a unit of New York Renco Group Inc., is unable to pay its 3,700 workers and has no cash for metal supplies for its La Oroya zinc and lead smelter, Mining Federation General Secretary Luis Castillo said today.
“The smelter is closed,” Castillo said by phone from Lima. “The company and the government don’t want to solve this problem, which will cost workers their jobs.”
The smelter was operating at 30 percent of capacity until last week. Banks froze Doe Run’s accounts on Feb. 24 after metal prices collapsed. Doe Run says it needs more time to settle its debts and invest in an environmental cleanup, which has cost the company $300 million since it took over a smelter in Peru in 1997.
Doe Run Resources Inc.’s Chief Executive Officer Bruce Neil and Doe Run Peru’s president Juan Carlos Huyhua will meet with government and mining company officials in a bid to wrap up a $175 million bailout this week, said Vladimir Huaroc, president of the Junin region, where the smelter is located. Both companies are units of Renco Group Inc.
‘Make or Break’
“This is a make-or-break week as the situation is unsustainable,” Huaroc said in a telephone interview. “There has to be a government decision as right now we’re trapped in a blind alley.” The government may operate the smelter as a last resort to prevent workers and 16,000 miners in the central Andes who supply the smelter from losing their jobs, he said.
Doe Run Peru spokesman Jaime Jesus wasn’t immediately available for comment when contacted by telephone. Doe Run Resources vice-president Barbara Sheppard didn’t immediately return calls or an e-mail seeking comment.
Zinc and lead have both fallen in London by at least a third since March 2008. Peru is the world’s third-largest zinc producer and fourth-biggest for lead.
Doe Run’s La Oroya smelter, 140 kilometers (87 miles) east of Lima, last year refined 114,259 metric tons of lead; 43,440 tons of zinc; 53,831 tons of copper and 1.1 million kilograms of silver, according to the Energy & Mines Ministry.
Doe Run, which posted $1.45 billion in sales in 2007, buys $1 billion of concentrates a year, according to its Web site. The shutdown of most of its operations forced about 30 mining companies in the Peruvian central highlands, the country’s main zinc and lead-producing region, to seek other buyers.
To contact the reporter on this story: Alex Emery in Lima at aemery1@bloomberg.net.
Last Updated: June 2, 2009 16:02 EDT |
