American Ira Rennert is the CEO of the Renco Group Inc., a corporation known for its disastrous environmental record. Renco’s Doe Run Peru subsidiary controls one of the ten worst environmental sites in the world in La Oroya, Peru, according to the Blacksmith Institute. This lead smelter has been a cash cow for billionaire Rennert’s offshore companies. It has also exposed thousands of Peruvians to extraordinary high levels of lead contamination. Most of children in La Oroya have lead poisoning.Despite spending hundreds of thousands of dollar lobbying the Obama administration to try and save Doe Run Peru, Rennert’s company has been forced to submit yet another restructuring plan to try to avoid liquidation of its interest in the notorious lead smelter. Peruvian and U.S. sources say Rennert’s representatives are trying to secure financing packages that would satisfy their largest creditor: the Peruvian government. But since La Republica, Peru’s most influential newspaper, has been focusing on the La Oroya controversy, the government has taken a much tougher line.
Until 2009, Doe Run Peru produced large profits for Rennert’s companies through its smelting operations. As the current government began to focus on La Oroya and demand the promised changes, Rennert’s company threatened to pull out of Peru altogether. The standoff caused the smelter to be shuttered in 2009 putting thousands of workers on the street. Doe Roe Peru charged that it was the Peruvian government that had failed to live up to its agreements to clean up parts of the site. The government and Doe Run Peru blamed each other about who was responsible for the long postponed much needed massive clean-up and environmental remediation.
Offshore companies controlled by New York billionaire Rennert took over the operation when Peru was being run by the corrupt Fujimori regime in the 1990s. At the time, Rennert’s subsidiary, Doe Run Peru, had agreed to make large investments in the smelter to mitigate the environmental damage it was causing in exchange for the rights to exploit the facility. The chaos after the 2000 change in the Peruvian leadership allowed Rennert’s companies to pull vast amounts of money out of La Oroya without ever completing all the promised environmental investments in the facility.
After creditors voted to reject Doe Run Peru’s first restructuring plan last month, the creditors, led by the Peruvian government, voted to start what it called an “operational liquidation” that allowed for the slim possibility that Doe Run Peru could avoid losing the La Oroya smelter, once one of Peru’s largest and most profitable despite its environmental history.
Operational liquidation could remove Rennert’s company from control of La Oroya and allow another company to take over the smelter. But locals fear that no other company will want to deal with the aging facility. Despite the health implications, the 3,500 plant workers fear that if Doe Run Peru and the government cannot reach an agreement, they could be facing a very bleak economic future with the plant simply being sold off piece by piece.
Doe Run Peru submitted its revised restructuring plan in mid-May to its board of creditors in a final effort to avoid liquidation. According to Reuters, the Peruvian government is not convinced the $200 million in credit from the commodities trader Glencore is enough to secure Peru’s interest.
“The company, in response to the concerns and relevant observations made by the government, has made significant changes to the restructuring plan submitted on April 12,” Doe Roe Peru said in a press release. “Approval of Doe Run’s revised restructuring plan by the board of creditors would permit the immediate initiation of operations at the metallurgical complex…” It said that the revised plan would allow the employees to return to work.
Peruvian and U.S. officials familiar with the negotiations agree that Rennert’s credibility is at the heart of the dispute. One U.S. official told DCBureau, “No one at the top of the Peruvian government believes Doe Run will keep its word. In light of how the parent company has behaved at other sites, there is no expectation that Rennert and his management have reformed.”