Renco Group Inc.’s Peruvian unit said it is in talks with banks and mining suppliers about financing after a global credit crisis discouraged banks from lending.
The Doe Run Peru unit “faces temporary problems,” Victor Belaunde, a spokesman, said today in an e-mailed response to questions. The unit cut 1,100 subcontracted workers at its copper mine and zinc, lead and copper smelter in January, according to the Mining Federation.
The problems are “a consequence of the impact that the international financial crisis has had on the company’s operations,” Belaunde said. “Doe Run Peru is working with banks and mining-concentrates suppliers in search of solutions.”
Lima-based newspaper El Comercio reported today that the Peruvian government may bail out the company after a group of banks led by Peru’s Banco de Credito cut off a $75 million line of credit. Belaunde declined to comment on the report.
Banco de Credito spokeswoman Aida Kleffmann didn’t immediately return calls or an e-mail from Bloomberg News seeking comment. Fernando Mendoza, Finance Ministry spokesman, declined to comment when contacted by Bloomberg.
The smelter has shut zinc- and lead-processing plants for lack of concentrates, Roiberto Guzman, a Doe Run Peru metallurgical union spokesman, said by telephone from La Oroya.
“The company said it isn’t able to buy concentrates as it owes suppliers,” Guzman said. “It was also late paying workers’ wages.”
Doe Run’s La Oroya smelter, 140 kilometres (87 miles) east of Lima, last year refined 114,259 metric tons of lead; 43,440 tons of zinc; 53,831 tons of copper and 1.1 million kilograms of silver, according to the Energy & Mines Ministry. It also refines minor metals.
The company, which was Peru’s fourth-largest exporter with $1.45 billion in sales abroad in 2007, buys $1 billion of concentrates a year, according to Doe Run’s Web site.
SourcE: Bloomberg
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