Doe Run faces its Peruvian victims in US court

Published by MAC on 2010-11-22
Source: Business News Americas, CooperAccion

US lawsuit could affect restructuring of Doe Run Peru - Peru

By Ryan Dube

Business News Americas

8 November 2010

Any eventual damages from lawsuits filed against the New York-based Renco Group and its affiliates over environmental contamination at Doe Run Peru's polymetallic smelter in La Oroya could affect the latter's long term sustainability and restructuring proposals, a source linked to Lima-based Doe Run Peru told BNamericas.

Thirty five plaintiffs from Peru filed 11 lawsuits against the Renco Group, its affiliates and individuals in a court in St Louis, Missouri, where the corporate offices of the Doe Run Company are located. The plaintiffs are claiming physical and psychological injuries from lead exposure and environmental contamination at La Oroya.

In response, the Renco Group sent a letter to Peru's government calling on it to appear in the lawsuits and "assume responsibility for any compensation that the Peruvian claimants could receive from the court."

As part of Doe Run Peru's 1997 privatization agreement, the Peruvian government agreed to assume responsibility for third-party claims related to contamination in La Oroya until the company completes its environmental cleanup program, known as PAMA.

The company has received several extensions to the timeline for the cleanup program, the most recent of which granted a 30-month extension in September 2009.

The US holding has not received a response from the government since it sent the letter, the source said. As a result, legal representatives for Renco and its affiliates will look at other alternatives, which could include filing a lawsuit against the government for breach of contract, the source added.

"Irrelevant" Demands

The government should disregard Renco's demands which are largely "irrelevant," according to national mining, oil and energy society SNMPE advisory committee member Jose Miguel Morales.

"[Renco] uses a one-sided argument. That is to say, the broadest [interpretation] for their interests and the narrowest for the interests of the country," official gazette El Peruano quoted Morales as saying. "The state should continue working as it has been and not worry about declarations by Renco."

Doe Run Peru suspended operations at its smelter last year when it ran into financial difficulties as a result of the global economic crisis. The company is currently undergoing proceedings at competition regulator Indecopi which will result in it being restructured or liquidated.

Built in 1922 by the Cerro de Pasco Corporation and acquired in 1997 by St Louis-based Doe Run, the plant is known for having caused serious lead contamination around La Oroya.

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Health precautions for La Oroya residents still valid - AIDA

By Ryan Dube

Business News Americas

12 November 2010

Peru's government needs to properly implement precautionary health measures for residents in La Oroya, where Lima-based Doe Run Peru's polymetallic smelter is located, Astrid Puentes, co-director of the Interamerican Association for Environmental Defense (AIDA), told BNamericas.

In 2007, following a petition submitted by AIDA, the Inter-American Commission on Human Rights (IACHR) asked the Peruvian government to take precautionary measures for more than 60 La Oroya residents. The inhabitants suffer from health problems believed to be caused by air, soil and water contamination from the metallurgical complex.

The measures included the provision of adequate medical treatment and specialized medical tests and diagnoses for the beneficiaries.

During a hearing this March, AIDA presented evidence that the government had not fully complied with the measures, while authorities said that they have met the demands of the commission and asked for the case to be closed.

"We proved with independent experts that there were many things that they had not complied with, so the commission has maintained the measures. They are still valid," Puentes said, adding: "The government is still in the process of complying."

"One of the problems is that the government is giving general medical examinations and what we need are specialized tests for people, because it is not a regular situation," Puentes said.

Ongoing Contamination

The metallurgical complex in La Oroya was built in 1922 by the Cerro de Pasco Corporation and nationalized in 1971. Doe Run Peru acquired it in 1997 in a privatization process that included an environmental cleanup agreement called PAMA.

The complex includes smelters and refineries that process copper, lead, zinc and silver concentrates, as well as several byproducts. The plant is known for having caused serious lead contamination around La Oroya.

Doe Run Peru suspended operations at the smelter last year when it ran into financial difficulties as a result of the global economic crisis without completing the PAMA cleanup.

As a result, residents are still exposed to contamination. "Because lead is everywhere, people are still exposed," Puentes said. "Contamination is still going on because the city has not been cleaned up."

Doe Run Peru is an affiliate of the New York-based Renco Group. The company is currently undergoing proceedings at competition regulator Indecopi that will result in it being restructured or liquidated.

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Workers still waiting for authorities to clarify Doe Run Peru contract

By Ryan Dube

Business News Americas

16 November 2010

Peru's national mining, metals and steelworkers federation FNTMMSP has not received a response to its request to discuss Lima-based Doe Run Peru's 1997 privatization agreement with government authorities, union leader Luis Castillo told BNamericas.

The federation sent a letter asking for a meeting with prime minister Jose Antonio Chang and mines and energy (MEM) minister Pedro Sanchez on November 8, and it expected to receive a response last week.

Workers want authorities to clarify recent statements made by the New York-based Renco Group - of which Doe Run Peru is an affiliate - regarding 11 lawsuits filed against the holding, its affiliates and individuals in a court in St Louis, Missouri over environmental contamination at Doe Run Peru's smelter in La Oroya.

Renco sent a letter to the government in October calling on it to appear in the lawsuits and "assume responsibility for any compensation that the Peruvian claimants could receive from the court."

The union has said the issue is creating greater uncertainty for the 3,500 workers at Doe Run Peru's polymetallic smelter, which has been halted since 2009.

State run environmental remediation firm Activos Mineros is currently looking into the issue, paper Expreso reported Sanchez as saying. "This has to be clarified because it is a legal issue and that is what Activos Mineros is doing," Sanchez said.

Doe Run Peru suspended operations at the smelter last year when it ran into financial difficulties as a result of the global economic crisis. The company is currently undergoing proceedings at competition regulator Indecopi which will result in it being restructured or liquidated.

Built in 1922 by the Cerro de Pasco Corporation and acquired in 1997 by St Louis-based Doe Run, the plant is known for having caused serious lead contamination around La Oroya.

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What is behind the Renco- Doe Run Press Release?

By Emma M. Gómez

CooperAccion Press Release

5 November 2010

Renco Group, the primary shareholder of Doe Run Peru (DRP), has launched a public campaign arguing that the Peruvian government is responsible for the environmental problems in La Oroya.

Although it may seem unbelievable, DRP has now demanded that the Peruvian State comply with liabilities and obligations arising from the multiple demands DRP is facing in the State of Missouri. A year ago, a group of residents of La Oroya filed 11 lawsuits against Renco Group and its affiliates with the Twenty Second District Court in St Louis, Missouri in the United States.

In fact, considering DRP’s history it is not surprising that they seek to evade their responsibilities. That is how they always act. However, in this case they have gone a step further in wanting the Peruvian government to be the one to assume responsibility for the health problems that their operations, and their lack of compliance, have generated.

Apparently DRP and Renco have taken refuge in the transfer contract of the metallurgical complex between Centromín and DRP, which allegedly established that Centromín would assume the responsibilities for the environmental damage arising from the complex.

This responsibility would supposedly have been stablished in Supreme Decree # 042-97-PCM. This decree states that in the Share Transfer Agreement, the Peruvian government grants warranties of declarations, assurances and commitments made by CENTROMIN PERU, increased social capital and subscription of shares resulting from the International Public Bidding for the promotion of private investment in the La Oroya Metallurgical Company.

It is important to analyse some elements of this situation:

What kind of contract did the Peruvian government sign, through Centromín, to transfer the La Oroya complex? Did they assume full responsibility for claims that would arise from pollution problems? Is it wise to assume unlimited liability for what a private company can do in our country?

Logic tells us that Centromín would only be liable for claims until 1997, the year the smelter was transferred to DRP. Clearly, a company that assumes ownership of an operation absorbs both the benefits and responsibilities for damages that the operation may generate.

The silence of our authorities and of Activos Mineros SAC (the successor to Centromín) is worrisome. Does the contractual clause Renco referred to exist? Must the Peruvian government assume responsibility of the U.S. lawsuits for damages caused by DRP? Will DRP and the Renco Group get their way so that all Peruvians will pay for their irresponsibility? Hopefully this will not happen and that our authorities speak out.