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Peru's La Oroya smelter can't produce copper, minister says

Bnamericas Published: Tuesday, May 24, 2016

Peru's bankrupt La Oroya zinc-lead-copper smelter, which has been shuttered since mid-2014, can't restart its copper circuit due to "obsolete" technology, environment minister Manuel Pulgar-Vidal said.

The former Doe Run Perú unit needs to be able to operate profitably while producing solely zinc and lead, Pulgar-Vidal said. The original bidding conditions were not strict enough in terms of an environmental clean-up, he added.

"The ministry has been flexible with timelines for sulfur dioxide emission limits, but even so they haven't managed to line up a buyer," Pulgar-Vidal said in a meeting with foreign reporters at the ministry in Lima. "There's no way the copper circuit can meet any standards, because it's obsolete."

Consultancy firm Dirige, chosen by a group of creditors earlier this year to manage the ongoing bankruptcy process, has not come up with a new operating plan, Pulgar-Vidal said. Dirige representative Pablo Peschiera didn't immediately return telephone calls seeking comment.

Previous administrators including Right Business and Profit Consultoría have blamed draconian environmental standards imposed in 2014 for scaring off potential buyers.

Creditors including Glencore, Trafigura Beheer, Pan American Silver, Buenaventura, El Brocal and Volcan have set August 27 as a date for the liquidation of the smelter and its Cobriza copper mine. The complex, which restarted zinc and lead operations in 2012 after a three-year shutdown but closed again in July 2014, owes about US$600mn to a group of 100 creditors including the workers' union and the government.

La Oroya, which has the capacity to produce a dozen different metals including copper and silver, can produce 122,000t/y of lead and 43,000t/y zinc, according to the energy and mines ministry (MEM). 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 filed for bankruptcy in 2009 after metals prices collapsed.

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