LIMA – Peru's nearly 100-year-old polymetallic smelter La Oroya failed to draw any offers on Wednesday in the last of six scheduled auctions, delivering a blow to President Pedro Pablo Kuczynski's plans to expand the Andean country's metals refining capacity.
Kuczynski had extended the liquidation deadline for La Oroya a year ago and vowed to do his best to revive it. But no one tried to buy the smelter in auctioning that started in March, even after the government raised sulphur dioxide emission limits to reduce the cost of upgrades.
La Oroya will be liquidated unless Kuczynski extends the deadline again, said Pablo Peschiera, director of consulting firm Dirige that has been tasked with finding a new operator.
Dirige has asked Kuczynski for another year to try to find a buyer, Peschiera said, adding that investors are still concerned about potential liability for pollution in surrounding soils.
The town of La Oroya next to the smelter was once named one of the ten most polluted places in the world by the group the Blacksmith Institute. Hundreds of children in La Oroya have been found to have dangerous levels of lead in their blood.
Earlier this month, the environment ministry asked for input from the public on possible changes to rules on polluted sites.
"That (proposed) norm is extensive and will require a study by us and by investors as well," said Peschiera. "There wasn't enough time to overcome" the obstacles.
The failed bid to sell La Oroya sets back Kuczynski's goal of raising the value of Peru's mineral exports by refining more concentrates at home. Kuczynski has said he hoped to revive La Oroya while encouraging investors to build a new smelter near Peru's southern coast.
Peru is the world's No 2 copper, zinc and silver producer.
Doe Run Peru, controlled by New York billionaire Ira Rennert's Renco Group, was La Oroya's most recent owner, but it went bankrupt in 2009 without finishing mandatory upgrades. The smelter is now controlled by Doe Run's former creditors.