January 5, 2011 / 5:53 PM / 9 years ago

Renco Group complains of unfair treatment in Peru

LIMA, Jan 5 (Reuters) - U.S.-based Renco Group, which could see its Doe Run Peru smelter liquidated next month, said on Wednesday it has been unfairly treated by Peru’s government.

Renco Group also said it could take its dispute to international arbitration under the terms of Peru’s free-trade agreement with the United States.

Peru’s mining minister said last week that creditors could decide to take over the multi-metal smelter or liquidate it in February under a bankruptcy process overseen by regulator Indecopi.

The government canceled the company’s operating license for the La Oroya smelter in July after it failed to complete an environment cleanup project. The smelter had not been operating for the previous year because of cash flow trouble caused by the global financial crisis.

The Peruvian government had asked Doe Run to secure financing and guarantees for $110 million owed to creditors and $150 million needed to clean up La Oroya, one of the world’s most contaminated sites.

The plant was privatized in 1997. Under the terms of the sale, Renco agreed to put filters on the smelter and Peru’s government promised to remove contaminants from the hills and the town surrounding the century-old plant.

Renco also said the pact protected it from lawsuits filed by local residents who complain that years of pollution has damaged their health.

In full-page advertisements published in Peruvian newspapers on Wednesday, the company said the government has not followed through on its own cleanup effort or honored the terms of the privatization agreement.

A government official dismissed the ads as a “provocation.” (Reporting by Teresa Cespedes and Caroline Stauffer; Editing by Tim Dobbyn)

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