Citibank elect to sell Doe Run at least U.S. $ 425 million

The meeting of creditors of Doe Run agreed today choose to Citibank as the investment bank that is responsible for conducting the sale of the metal at a base price of U.S. $ 425 million, which was estimated by the bank, told Biznews . pe, Richard Almerco, counsel workers union.

In this regard, Almerco said that figure could rise even more considering that from November Doe Run will invest around U.S. $ 200 million with the aim of reviving the lead circuit of La Oroya, which will be held as evidence, to return to their positions and work to 600 new workers.

He noted that the board has 10 days to sign the respective contract with Citibank in exchange for which agree to pay U.S. $ 150,000, to be paid to the bank in three equal parts from the signing of the agreement.

And once that is achieved the sale, whose deadline is set for April 12, 2013, the bank may charge a fee of up to $ 4 million, scored Almerco.

In that sense be said that from February or March of 2013 when the investment bank will have clearly defined what the bidding firms, which may be either national or foreign. Do not rule out including some creditors may appear as Volcan or Buenaventura.

He is also Managing Director of Studio Almerco Lawyers said that in the unlikely event that Citibank decides not to sign the agreement, then the board would evaluate the conditions set by the bank UBS, which valued the company at just U.S. $ 125 million, much lower than estimated by Citibank for $ 425 million

After 3 years, Doe Run Peru's La Oroya finally restarts

Peru's Minister of Energy and Mines says the resumptions of operations at the La Oroya metallurgical complex will benefit both workers and the local economy.

Peru's Minister of Energy and Mines, Jorge Merino Tafur, said Sunday the restart of the circuit operations of the zinc smelter at the La Oroya complex will financially benefit hundreds of workers and the local economy.

The administrator of the Doe Run Peru Company, Rocio Chavez, announced Saturday on RPP radio, "We have come to La Oroya to tell all the people of La Oroya and Peru on this memorable date we announce the restarting of operations at the metallurgical complex of La Oroya after its being shut down for three years.[sic]"

The restart of operations will begin on the zinc-processing circuit, which now has its smelting furnaces burning and the reactors on, she said. "The first shipment of concentrates arrives today so we can start production in the next few days."

Merino Tafur noted that resumption of operations of the zinc circuit has benefited up to 500 workers, who are now working full-time. He noted the zinc circuit meets environmental standards.

The minister observed resumption of zinc operations gives "a not too distant horizon" of resumption of lead operations. The metallurgical complex's lead circuit meets environmental standards, while the copper circuit currently does not meet the standards contained in La Oroya Program of Environmental Compliance and Management.

The La Oroya complex includes both smelters and refineries that process copper, zinc, gold, silver, lead, indium, bismuth, gold, selenium, tellurium, antimony and other producers.

Merino Tafur said he was looking forward to resolving pending issues related to the copper circuit, particularly the pending construction of a sulfuric acid plant for copper, which was required by the Peruvian government to remove pollutants at the metallurgical complex.

Resumption of the copper circuit will keep the mine in Huancavelica Cobriza in operation, the minister noted. The underground mine produces copper concentrates for the smelter.

Merino Tafur said the resumption of operations at the complex was achieved through consensus and the efforts of the management company Right Business, workers at the smelter, and creditors of the company Doe Run Peru, who were all interested in resurrecting a vital investment to the economy of La Oroya.

In April, Doe Run Peru was declared by its creditors to be in a process of "operational liquidation," meaning that while the creditors would not approve the company's restructuring plan, they would allow the company to resume production while the board of creditors further analyzed Doe Run Peru's situation and prepare to make a final decision.

Doe Run Peru to be liquidated after rejected restructuring of La Oroya smelter

Metals producer Doe Run Peru’s creditors rejected a restructuring plan the company presented with a view to restarting operations at the La Oroya smelter, said in a statement the Energy and Mines Ministry, Jorge Merino Tafur.

The latest plan presented by the company was “unviable,” which is why the group decided on its liquidation, the legal representative of the ministry, Rosario Patiño, told local press following the creditors meeting.

The decision does not mean that La Oroya will be shut down for good, according to Patiño.

Doe Run Peru, an affiliate of Missouri-based parent company Renco Doe Run, was placed in a process of “operational liquidation,” which allows the company to continue operating while the board of creditors further analyzes its situation and makes a final decision, she explained.

Instead, the creditors –including the Peruvian government- could have chosen to close the nearly bankrupt company, letting go its approximately 3,000 workers.

Another solution could have been restarting operations at La Oroya under another operator, as has been suggested by different authorities this week. An alternative strongly opposed by the community, environmentalist groups and NGOs, such as Oxfam America, which said re-opening the smelter would place La Oroya’s children at high risk.

A 2005 study carried out by the University of Missouri-St Louis and quoted by PeruthisWeek.com, showed that 97% of children under the age of 6 had high lead content in their blood, as a result of operations at La Oroya. According to a 2011 government study, the blood levels have been decreasing since then, but the contamination persists.

Doe Run Peru’s polemic smelter will remain shuttered, while operations at the company’s Cobriza mine may continue, the president of the creditors’ board, Diego Calmet, told Peruvian newspaper La República.

He added that the company’s restructuring plan would have implied the resumption of operations without Doe Run Peru having completed an environmental clean-up program, putting the level of pollution in the area well above legal limits, Calmet said.

The company has up to a year to submit a new plan. If approved, it would allow it to restart operations at La Oroya.

Financial difficulties related to the global financial crisis, forced Doe Run Peru to halt its operations in 2009 without completing the environmental cleanup program.

Constructed in 1922 by the Cerro de Pasco Corporation and acquired in 1997 through a privatization process by Doe Run, the plant produced 11 metals, including copper, zinc, lead and silver.

The plant is known for having caused serious lead contamination around La Oroya.

Two other studies already done on Conga's EIS - report

Two independent studies have already been completed on the water component of US-based Newmont Mining's (NYSE: NEM) Minas Conga gold-copper project in Peru's Cajamarca region, paper La República reported.
The first study was carried out by US geochemist and hydrologist Robert Moran, who was hired by US human rights organizations, and is currently being translated into Spanish, according to the report.
The other study was done in November by Spanish hydro-geologist Javier Lambán in collaboration with the NGO Engineers Without Borders from Barcelona.

"The biggest problem is in the treatment of groundwater. The mining project's EIS [environmental impact study] does not provide a complete inventory of water points, so it is important to assess potential impacts on groundwater," Laura González, a representative from the NGO, was quoted as saying.

On the other hand, Lambán believes that Conga's hydro-geological study lacks structure, development and appropriate content, according to the report.

"There are conceptual mistakes such as talking about potential evaporation and not potential evapotranspiration," Lambán was quoted as saying.

The reports will be presented to authorities and be available to the general public.

Meanwhile, in mid-February the government awarded contracts to three other international experts to review the water component of Conga's EIS. These experts were scheduled to meet with Cajamarca authorities on Thursday to receive a report on water resources in the region before starting their 40-day analysis.

With an estimated capex of US$4.8bn, Conga is the biggest investment project in Peru's US$52.2bn mining portfolio.

Newmont suspended construction at the project last November due to increasingly violent protests against the project. Opposition has mainly centered on water use.

Newmont has 51.35% stake in the project, while local miner Buenaventura (NYSE: BVN) and the World Bank's International Finance Corporation hold 43.65% and 5% stakes, respectively.

Average output over the first five years is estimated at 650,000-750,000oz/y gold and 160M-210Mlb/y (72,575-95,254t) copper at cash costs of US$300-400/oz and US$0.95-1.25/lb, respectively.

Govt supports resumption of operations at La Oroya despite Doe Run Perú lawsuit

Peru's government continues to support the resumption of operations at Lima-based Doe Run Perú's La Oroya metallurgical complex in Junín region despite the recent lawsuit filed by the latter in an effort to remove the government from its list of creditors.
Operations at the complex have to restart as soon as possible, according to mines and energy (MEM) minister Jorge Merino.

"We confirm the government's position... [which is] to support the resumption of operations at La Oroya because we believe that we need to protect the workers, to respect the environment and, above all, to ensure the health of La Oroya," Merino said in an interview on local channel TV Perú.

"We hope that the restructuring program that the creditors approve will contemplate those basic conditions," he added.

The lawsuit was a "surprise," according to the minister, who said he expects the company to withdraw the measure as a goodwill gesture.

"You can't have on the one hand a lawsuit for US$800mn and on the other have congress helping someone that is suing the state," Merino said.

Peru's congress is expecting to approve a legal measure in H1 to extend the timeline for Doe Run Perú's environmental cleanup plan (PAMA) at La Oroya.

Meanwhile, Doe Run Perú is suing the Peruvian government in the US for US$800mn for allegedly violating equal-treatment clauses in the US-Peru free trade agreement.

Operations at La Oroya were stopped in 2009 when the company ran into financial difficulties as a result of the global financial crisis. In September of the same year, congress approved a 30-month extension to the deadline to complete PAMA but this was not complied with.

La Oroya produced 11 different metals but mainly copper, zinc, lead and silver.
Built in 1922 by the Cerro de Pasco Corporation and acquired in 1997 in a privatization process by St Louis-based Doe Run, the plant is known for having caused serious lead contamination around La Oroya.

Doe Run Perú is an affiliate of the New York-based Renco Group.

Doe Run Perú sues govt for US$800mn

A lawsuit presented by Lima-based Doe Run Perú against the government claiming US$800mn in damages could affect the restart of operations at its La Oroya metallurgical complex in Junín region, according to the mines and energy ministry (MEM).

The company is suing to have the government removed from its list of creditors, after competition regulator Indecopi recognized the debt that Doe Run Perú owes to the government in unpaid fines.
Meanwhile, in the US Doe Run is suing the Peruvian government for US$800mn for violating equal-treatment clauses in the US-Peru free trade agreement.

MEM warned that the lawsuit filed by Doe Run Perú against the Peruvian state without proper notice could affect the resumption of operations at the company's La Oroya plant.

"The attitude of Doe Run Perú is inexplicable, especially because it hinders the efforts being made by the state as the largest creditor in the meeting of creditors, which could affect the prompt resumption of operations at the La Oroya metallurgical complex " MEM said in a release.

MEM said it reaffirmed its willingness to maintain a positive attitude so that Doe Run Perú could restart its operations and meet its environmental obligations, ensuring employment for workers, environmental control, health and sustainable development of the metallurgical plant.

Doe Run Perú represents the type of investment that the nation does not want to have due to non-compliance of agreements with the state, said the president of the national confederation of private business (Confiep) Alfonso García Miró.

"For us this new lawsuit from Doe Run was a surprise in the sense of challenging the state's participation as a creditor," said mines and energy minister Jorge Merino.

Operations at the complex were stopped in 2009 when the company ran into financial difficulties as a result of the global financial crisis. In September of the same year, congress approved a 30-month extension to the deadline to complete its cleanup plan at the La Oroya metallurgical complex but this was not complied with.

In mid-January Doe Run Perú's group of creditors voted unanimously to keep the management of La Oroya in the hands of the company, which was given 60 days to present a restructuring plan which must include a commitment to its environmental obligations.

La Oroya produced 11 different metals but mainly copper, zinc, lead and silver.
Built in 1922 by the Cerro de Pasco Corporation and acquired in 1997 in a privatization process by St Louis-based Doe Run, the plant is known for having caused serious lead contamination around La Oroya.

Doe Run Perú is an affiliate of the New York-based Renco Group.