June 14, 2010 / 5:18 PM / 9 years ago

Peru Doe Run workers protest, want smelter restart

* Workers blocking key road in central Peru

* Peruvian president accuses the company of “blackmail”

* Doe Run struggling with financial troubles

LIMA, June 14 (Reuters) - Workers at metals producer Doe Run Peru began a protest on Monday demanding the company resume production at its La Oroya smelter, which has been offline for a year due to financial troubles.

The Peruvian government said Doe Run Peru must restart the plant by July 24 or it will shut down the smelter for good.

Doe Run Peru, owned by privately held U.S.-based Renco Group, stopped production at La Oroya last June when it ran out of money after banks cut off credit and metals prices sank.

“(The protest) aims to press the company as well as the government,” the head of the mining workers federation Luis Castillo told Reuters. “They are the two organizations that have to find a solution to this problem.”

According to local radio reports, the workers are blocking a key road in central Peru.

Doe Run bought La Oroya, the largest metallurgical complex in Peru, a decade ago in a privatization auction and says it has spent millions of dollars on an environmental cleanup program for a site that is considered one of the world’s most polluted places.

The company said in March that Swiss commodities trader Glencore [GLEN.UL] gave it a credit line that would allow it to finish the cleanup work and pave the way for a restart of operations. [ID:nN0163341]

But later Doe Run said it was unclear when the smelter would reopen, adding it hinged on reaching an agreement with mining suppliers, who the company owes about $110 million.

“If by July 24 (they have not resumed operations) the refinery will be shut down, we’ll see how to help the workers,” President Alan Garcia told reporters on Monday.

Garcia said Doe Run wants to see the deadline postponed and is using the workers to “blackmail” the government into allowing the company to invest less money in the cleanup.

Company officials say Doe Run has spent $307 million scrubbing the smelter and may need up to $150 million more to complete the cleanup.

La Oroya produces copper, lead, zinc, silver and gold. (Reporting by Patricia Velez; Writing by Eduardo Garcia; Editing by John Picinich)

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