La Oroya smelter creditors extend liquidation process

Creditors of the bankrupt La Oroya zinc-lead smelter voted to extend an ongoing liquidation process after the administrator of the former Doe Run Perú unit ruled out the possibility of a sale in the short term.

Creditors including Glencore, Trafigura Beheer, Pan American Silver, Buenaventura, El Brocal and Volcan voted to extend the process by six months after smelter administrator Profit Consultoría informed that low metals prices, the smelter's weak financial position and tough environmental regulations meant it would be difficult to sell the shuttered metallurgical complex.

The board of creditors also chose energy and mines ministry (MEM) representative Rosario Patiño and workers union official Luis Castillo as president and vice president of the board, respectively, according to a ministry statement.

The ministry accepted to head the board for lack of other candidates, Patiño said in the statement. The government and the smelter workers are also among the 100 creditors owed about US$600mn by Doe Run Perú.

"It's important that we maintain a process that takes into account the interests of the creditors under all circumstances, including the possibility that the La Oroya operation restarts, complying with legal norms and that the workers can get their jobs back," Patiño said.

Creditors are scheduled to meet again on September 28 to name a new administrator after Profit director Alfredo Romero resigned, the ministry said.

The board of creditors extended the liquidation process after the government last month changed the country's bankruptcy law to grant more time for the sale of the smelter and its Cobriza copper mine following violent protests in the central Andes that left one dead and 70 injured.

The smelter restarted zinc and lead operations in 2012 after a three-year shutdown but closed again in July 2014. La Oroya, the only poly-metallic smelter in South America, can produce 122,000t/y of lead and 43,000t/y zinc, according to the ministry. Cobriza produced 21,159t copper in 2014.

Built in 1922 by the Cerro de Pasco Corporation, and acquired in 1997 in a privatization process by Doe Run, La Oroya halted its operations in 2009 after metals prices collapsed. La Oroya has the capacity to produce a dozen different metals including copper and silver, but failure to meet environmental standards has shuttered the copper circuit.