Peru's Kuczynski wants to relax air standards to spur refining

LIMA (Reuters) - Peru’s President-elect Pedro Pablo Kuczynski called Peru’s air quality standards “unrealistic” on Wednesday and proposed lowering them to spur investments in smelters that would boost the country’s key mineral exports.

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Kuczynski, a 77-year-old former investment banker who will take office on July 28, said the value of Peru’s mining exports could rise 25 percent solely through greater smelting and refining capacity.

In a speech to farmers in the town of Ica, he said “unrealistic” environmental rules were blocking needed investments.

“Our standards for emissions are more demanding than in Finland, that’s why more smelting and processing plants aren’t built. We have to change that!” Kuczynski said in broadcast comments.

Kuczynski did not specify which rules should be changed. However, Peru’s standard for sulfur dioxide emissions, a byproduct of the smelting copper and other base metals, has in the past been criticized as too strict by the mining industry.

Kuczynski said air quality standards used in other mining countries should be a reference.

“Let’s get on the same level with the best countries. Who are the best? Countries like Canada or Chile,” Kuczynski said. “Let’s not stick to something totally unrealistic.”

Kuczynski has proposed turning Peru into a metals processing hub with the help of its top trade partner China to wring more value out of its exports as mineral prices slump.

Last week Kuczynski vowed to do his best to reopen the country’s nearly 100-year-old polymetallic smelter La Oroya, which was shuttered in 2009 amid pollution and financing troubles and faces liquidation on August 27 if a buyer is not found. Kuczynski is pressing incoming lawmakers to extend the liquidation deadline.

Building a new copper circuit at La Oroya that would comply with Peru’s current air standards would cost $500 million, but only $200 million if Canadian rules applied, Kuczynski said on Sunday in an interview with local broadcaster RPP.

Peru’s air quality standards are set by the environment ministry and do not need congressional approval. However, weakening them to boost private investments, as opposed to on recommendations from scientists, could draw the ire of environmentalists and opposition lawmakers.

The town of La Oroya was ranked as one of the 10 most polluted places in the world in a 2007 report by the environmental group the Blacksmith Institute.

Peru is on track to become the world’s second-biggest copper producer this year, and is also a major producer of zinc, lead, gold, and silver.

Reporting By Marco Aquino; Additional Reporting and Writing by Mitra Taj