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PERU
Doe Run eyes damages
1/19/2011
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US miner responsible for environmental damage in Andes threatens government with international arbitration.

The US company Renco Group and its Peruvian affiliate Doe Run Peru are threatening to begin an international arbitration against the Peruvian government for shuttering its smelting plant in La Oroya, known as one of the most highly-contaminated cities on Earth.

In a statement, Renco and Doe Run said the Peruvian government is violating the free trade agreement with the United States, which has been in place for nearly two years.

But Doe Run, which has run the plant in Peru´s central Andes since 1997 when it purchased it from state mining company Centromin, has never completed an environmental cleanup and improvement of the plant and its operations within the 10-year period.

The Peruvian government gave the company two extensions, but the Doe Run Peru said it was unable to complete the clean-up because of financial difficulties. Suppliers stopped giving it minerals to process, banks cut off its credit lines and in June of that year, it stalled operations.

In a statement, Doe Run accused Centromin, its successor Activos Mineros and the Peruvian government of failing to clean up the soil in and around La Oroya.

While it was operating, the plant spewed some 900 metric tons of sulfur dioxide into the air every day. Several studies have found the local residents, particularly children, to have levels of heavy metals in their blood, such as lead, that surpass by far the limit of 10 micrograms per deciliter, as established by the World Health Organization.

Nongovernmental organizations CooperAcción and the Red Peruana por una Globalización con Equidad, or RedGe, said Doe Run is threatening arbitration because of a lawsuit filed in Missouri by members of the La Oroya community against the company for alleged health damage as well as a complaint filed before Peru´s consumer protection agency, Indecopi.

The company´s creditors are expected to decide whether to liquidate or restructure the company.

For CooperAcción and RedGe, Doe Run´s strategy “will depend on what the Peruvian state does or does not do.”

“Several errors have already been committed, like giving [the company] extensions for environmental investments by a company that had already shown to be irresponsible,” they said.

For Alejandra Alayza, executive coordinator of RedGe, “the excessive rights protection that free trade agreements give companies like Doe Run, which has systematically failed to fulfill its obligations in Peru, have given them more international mechanisms to sue the Peruvian state.”

The government has 90 days, which are up in March, to reach an agreement with the company before the arbitration process begins.
—Latinamerica Press.


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