LIMA, June 7 (Reuters) – Doe Run Peru is planning to send thousands of workers at its metallurgical facility home for 90 days while it looks for ways to survive financially, a company official said on Sunday.
Doe Run Peru, the country’s fourth-largest metals exporter, generates some 3,500 direct jobs and 16,000 indirect jobs.
It halted all operations at its sprawling La Oroya smelter earlier this week because financial and environmental setbacks have prevented it from buying concentrates.
“Our situation forces us to take measures to help us survive, so we have been forced to resort to sending workers home,” Jose Mogrovejo, vice president for environmental affairs, told Reuters.
“We estimate the furlough for the majority of workers will start June 15 and last for three months,” he added.
Operations at the smelter, hobbled by financial woes, have been off and on since March, after banks cut credit over worries about falling metals prices. Without financing, the company could not consistently buy concentrates.
In April, a group of Peruvian miners that sells supplies 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.
One of the stipulations, which Renco has not yet met, was that it turn its shares over to the government as a way of promising it would complete an environmental cleanup project.
The current deadline on the cleanup at La Oroya, which frequently ranks as one of the world’s top 10 most polluted places, is October.
The company has said meeting that deadline will be “difficult” and has asked the government to give it more time. The mining ministry has so far said it is not willing to extend the deadline.
Mogrovejo said the company will continue to work with the government and its suppliers to reach a “reasonable” solution. (Reporting by Teresa Cespedes; Writing by Dana Ford, editing Bernard Orr)