Maryland Firm Gets Extension for Toxic Cleanup in Peru
Violence erupted in La Oroya, Peru, this week as Doe Run Resources Corp. of Maryland Heights won an extension on its government-mandated plan to clean up toxic pollution at its metallurgical complex in the Andes Mountains.
The Peruvian government announced a compromise Tuesday after workers stopped production at the La Oroya lead, copper and zinc plant in support of an extension.
Doe Run had threatened to close the facility, which employs about 3,500 people, unless the government gave it five more years to complete $134 million in environmental improvement projects.
The extension would ease financial pressure on the troubled company, but it provoked outrage from health and environmental activists who've demanded a quicker cleanup plan.
American Presbyterian missionary Hunter Farrell of Lima, Peru, called Doe Run's demand for an extension "economic blackmail."
"Everyone wants the company to stay and do business and continue to employ people," said Farrell, who works with a group called the Movement for Health of La Oroya. "But there is an element of human dignity and the right to the health and life of the people."
Doe Run's pollution has been the target of environmental enforcement efforts in Peru and in Herculaneum, Mo., where the company operates another lead smelter.
Doe Run officials have said the company is working hard to clean up the mess it inherited in La Oroya when it bought the plant in 1997 from the Peruvian government. To date, the company has spent $33 million on environmental work mandated under the cleanup plan, called PAMA for its Spanish acronym.
The last major remaining project is a $107 million sulfuric-acid plant designed to reduce emissions of sulfur dioxide. Spokeswoman Barbara Shepard said that the company decided to reprioritize its improvements to focus on other needs. In July, Doe Run asked the government to allow the company to delay completion of the acid plant until 2011 from 2006.
Shepard said the company didn't request the change for financial reasons. "We're dealing with priorities. What we need to focus on is health risks," she said.
However, the company's most recent filing with the Securities and Exchange Commission, dated Sept. 24, stated that "Doe Run Peru expects that it will not be able to comply with the spending requirements of the PAMA investment schedule in 2005 and 2006 and could be subject to penalties."
The filing also noted that if the Peruvian government refused the request for extension, "Doe Run Peru could be forced to cease or curtail operations at the La Oroya smelter."
Shepard said the company would focus on reducing rampant lead poisoning in La Oroya. A 2002 study by independent public health workers found that nearly 100 percent of La Oroya's 18,000 children have lead poisoning. The company's own tests in 2000 found an average blood lead level of 36.7 micrograms per deciliter in children up to 3 years old.
In the United States, a blood lead level of 10 micrograms per deciliter is considered a concern. Even at low levels, lead has been linked to behavioral problems, decreased intelligence and developmental difficulties.
Shepard said the company has been working in a joint program with the Peruvian health ministry to help children with high blood lead levels through education and better hygiene. Among other things, the program teaches them to wash their hands to reduce the amount of lead they might pick up on their fingers and put into their mouths.
Shepard also said the company has proposed reducing "fugitive" lead emissions that seep from the doors and windows of the plant. A document provided by Doe Run showed that the company proposed to spend about $12 million on reducing dust emissions through 2006. Major investment on the sulfuric acid plant would be delayed until 2007.
Tension over the proposed delay grew this week after workers shut down the plant at midnight Monday. Peruvian media reported street violence and a highway shutdown.
The latest development comes as the man behind Doe Run, New York financier Ira Rennert, wrestles with the bankruptcy of another of his companies, Magnesium Corp. of America, and basks in the glow of success from still another, AM General Corp., which produces Hummer vehicles. Rennert's Renco Group, based in New York, acquired Doe Run in 1994.
Renco, which acquires distressed companies with a method using large amounts of junk bonds, had Doe Run go heavily into debt when it acquired the smelter in Peru in 1997.
In the extension issued by Peru's president, Alejandro Toledo, Doe Run could ask for up to three years for certain projects in the PAMA, and if it has support from the regional government, could receive an additional year.
Source: Knight Ridder/Tribune Business News