Peru Must Pick Job Losses Or Pollution At Smelter
Date: 28-Aug-09
Country: PERU
Author: Terry Wade
Peru Must Pick Job Losses Or Pollution At Smelter
Three-year-old Nixon (L) and his four-year-old brother
Erick stand at a balcony overlooking the Doe Run Peru smelter in the
Andean city of La Oroya, east of Lima, in this August 19, 2009 picture.
Photo: Pilar Olivares
LA OROYA - Thousands of workers are demanding Peru's government save
their jobs at a shuttered metals smelter high in the Andes, even if it
means delaying a cleanup at the plant that has turned their town into
one of the most polluted places on earth.
"We don't want the plant to close, it should stay open, but we also
don't want pollution," said Monica Ayala, 40, who lives in front of the
smelter and says her three children cough up dark soot.
Union members from Doe Run Peru's La Oroya factory say they will block
highways in central Peru starting on Monday unless President Alan Garcia
acts decisively to end a months-long crisis at the world's most
diversified metals smelter.
The future of the smelter and about 20,000 local jobs that depend on it
hinges on a tussle between Garcia and Ira Rennert, the New York
billionaire who owns the plant, over a contentious environmental
cleanup.
The controversy could play into the hands of opposition candidates from
the left and right ahead of Peru's elections in 2011, when Garcia cannot
run.
Doe Run, which says it has spent $307 million scrubbing the smelter and
may need to spend $150 million more, blames the government for going too
slowly with its share of environmental work.
The president, whose popularity is below 30 percent and faces a sharp
economic slowdown, would anger environmentalists if he were to allow
more delays on the cleanup of the plant, which they have complained
about for years.
Operations at Doe Run Peru began unraveling late last year after metals
prices dropped by half on the global economic crisis and banks canceled
its credit lines. Its furnaces were shut by June and last month it filed
for creditor protection.
Workers and many La Oroya residents want Garcia to extend a deadline
requiring the company to finish cleaning up its smelter by October. That
would help Doe Run regain access to financing.
"We are asking for a reasonable extension," said Nazario Flores, a
lawyer for the Comite de Defensa de La Oroya, a community group. "If the
plant is permanently paralyzed, there will be chaos here.
The plant opened in 1922, and Doe Run bought it from Peru's government
in 1997. The smelter has been the main source of pollution in a town
ranked as one of the 10 most contaminated on earth, according to the
Blacksmith Institute, an environmental organization.
Many townspeople have high levels of lead and arsenic in their blood.
"Obviously, so long as the cleanup that we are committed to isn't
complete, we share some responsibility. But this has to be seen in light
of all the work we have already done," said Jose Bengoa, vice president
of operations for Doe Run Peru."
"Things have gotten better in the last 12 years, and nothing was done
during the preceding seven decades."
HISTORY OF DISTRUST
In a bid to save cash, the company halted spending in December on the
last phase of its environmental cleanup program, which aims to further
cut smokestack emissions.
Its smelter eventually ground to a halt after $110 million it owes to
mining companies piled up and it ran out of cash to buy mineral
concentrates for its refinery.
To start producing again, it needs a cash infusion from its owner or a
loan from a bank, but neither will put up money until the government
extends the cleanup deadline.
Garcia's government says it would only give Doe Run more time if Rennert
puts 100 percent of its shares in escrow as a guarantee that he will
finish the job.
That has created a stalemate, with the company and workers pushing the
government to ease up. Even local activists who have complained about
pollution for years say their town's economic engine must restart. Some
call it "a necessary evil."
Doe Run says it needs a 30-month extension to build and pay for a sulfur
dioxide capture system for its copper refinery, or half that time if it
gets a bank loan.
Since buying the plant, Doe Run Peru says it has slashed lead and
arsenic emissions into the air, and industrial water discharges into a
nearby river, by about 80 percent.
Still, after decades of pollution, residents are distrustful.
"We're considered a problem because we complain," said Meliton Rivera,
42, who lives across the river from the plant. "The lead comes straight
from the smokestack."
Two of his four children have elevated levels of lead and arsenic in
their blood and are slow learners. Thin air and toxic fumes make
breathing a chore in the town 12,300 feet in the Andes.
GARCIA CAUGHT IN A JAM
For miles around the plant, high levels of lead can be found 4-5 inches
into the topsoil, the company said citing government studies. Children
are exposed to it when they play in the dirt, while chickens and lambs
people raise in their backyards ingest it, health officials say.
The company says the government is responsible for cleaning up
contamination that was emitted before Doe Run bought the plant.
Pollution has accumulated since early in the last century on the canyon
walls surrounding the town.
As the impasse over the extension drags on, Garcia has faced muted calls
to nationalize the company, though doing so would clash with his
pro-market policies.
He has criticized left-wing leaders in Venezuela and Bolivia for taking
over private companies. Nationalizing Doe Run would saddle his
government with more environmental liabilities.
Granting Doe Run a financial bailout would invite criticism that he is
pampering Rennert, whose 66,000 thousand square foot mansion in the
Hamptons is one of the largest houses in the United States. Rennert's
holding company has rebuffed requests to inject more money into Doe Run
Peru.
After Rennert bought the plant, Peru prohibited him from taking profits
out of it until all environmental compliance rules were met. Doe Run
officials say the smelter lost money for years before the boom times of
2006 and 2007, as archaic equipment was updated.
Rennert's holding company Renco declined to comment.
Even after Doe Run does finish its smelter cleanup, residents fear La
Oroya's hills will still be contaminated.
One pessimist is Sofia Eunicia Quinta, 32, a mother of four. One of her
children has 43 micrograms of lead per deciliter of blood, four times
the level considered safe.
"The truth is there is no solution here," she said.
(Editing by Kieran Murray and David Gregorio)
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