La Oroya smelter creditors to hold sale-deadline talks

Wednesday, September 16, 2015

Creditors of the bankrupt La Oroya zinc-lead metallurgical complex in Peru are scheduled to meet September 18 to set a new deadline for the sale of the former Doe Run Perú unit, the government said.

Creditors including Glencore, Trafigura Beheer, Pan American Silver, Buenaventura, El Brocal, Volcan and Fima will also vote for a new president and vice president of the board of creditors after Volcan and Fima officials resigned, the energy and mines ministry (MEM) said in a statement.

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The board of creditors scheduled the meeting after the government last month changed the country's bankruptcy law to grant more time for the sale of the smelter. Creditors may continue to operate the smelter and its Cobriza copper mine, originally scheduled for closure at the end of August, for another 12 months while they seek a buyer for both units.

The legislative decree was issued after workers' protests in the central Andes left one dead and 70 injured last month. A report presented by Swiss investment bank UBS, hired in 2012 to manage the sale process, listed objections of potential bidders including demands for state agency Activos Mineros to clean up decades-old environmental liabilities in La Oroya and greater flexibility for hiring personnel, according to the government.

The smelter restarted zinc and lead operations in 2012 after a three-year shutdown but closed again in July 2014. The smelter owes about US$600mn to a group of 100 creditors.

La Oroya, the only polymetallic smelter in South America, can produce 122,000t/y of lead and 43,000t/y zinc, according to the ministry. Cobriza produced 21,159t copper in 2014.

Built in 1922 by the Cerro de Pasco Corporation, and acquired in 1997 in a privatization process by Doe Run, La Oroya halted its operations in 2009 after metals prices collapsed. La Oroya has the capacity to produce a dozen different metals including copper and silver, but failure to meet environmental standards has shuttered the copper circuit.