Peru says won't intervene in Doe Run Peru saga

LIMA, June 22 (Reuters) - Peru's government rejected calls on Monday to intervene in troubled Doe Run Peru, as thousands of workers demanded President Alan Garcia bail out the company to save their jobs.

Workers and people who live in the city of La Oroya, which surrounds the company's sprawling smelter, were blocking Peru's main east-west highway to demand the government take a stand.

But the government has said it won't take over the financially troubled unit of U.S.-based Renco.

"An intervention by the government would be very complicated in terms of responsibilities and financial consequences," Mines and Energy Minister Pedro Sanchez said on RPP radio. "It's very probable that, given how things are, we'd face international court cases."

Banks canceled the company's credit lines about four months ago after metals prices fell.

In April, a group of mining companies that sell concentrates to Doe Run Peru agreed to give it a $175 million credit line if its parent company, U.S.-based Renco Group, met two conditions.

The stipulations were that Renco had to fill a $156 million financial shortfall in its Peruvian unit and pledge its shares to the Peruvian government as a way of promising that its unit would finish an environmental cleanup project at one of the world's most polluted sites.

So far, the conditions haven't been met, Sanchez said.

"The company is taking this problem to extremes with its refusal to resolve the items that were agreed upon," Sanchez said.

When Doe Run Peru bought the smelter in 1997, it was expected to take 10 years to clean up La Oroya. In 2006, the company got a three-year extension.

Doe Run Peru says it has so far spent $307 million on repairing damages and total costs will hit $500 million. (Reporting by Marco Aquino; Editing by Christian Wiessner)