UPDATE: Doe Run To Pay $7 Mln Penalty, Will Shut Lead Smelter

NEW YORK, Oct. 9 -- Doe Run Co., North America's largest lead producer, will pay a $7 million civil penalty in connection with what the government said are violations of federal and state environmental laws.

As part of the settlement, the privately held company will also shut its lead smelter in Herculaneum, Mo., by the end of 2013 and could end up spending more money for environmental cleanup in the state.

A statement from the U.S. Justice Department, U.S. Environmental Protection Agency and Missouri Department of Natural Resources said Friday that the company violated a series of environmental laws including the Clean Air Act, Clean Water Act and the Missouri Air Conservation Law at 10 of its lead mining, milling and smelting facilities in southeast Missouri.

"The agreement enables the company to address historical and more recent environmental issues, while still providing jobs for our employees, strategic metal to our customers and the $1 billion economic benefit we provide to the region," Doe Run Chief Executive Brice Neill said in a written statement.

The government agencies said the settlement will reduce lead emissions in several southeastern Missouri communities. The closing of the Herculaneum facility will also reduce carbon-dioxide emissions by at least 101,000 tons annually, the government's statement said.

The agencies said the company could end up spending about $65 million to correct the violations. That would include the establishment of financial assurance trust funds, at an estimated $28 million to $33 million, for the cleanup in Herculaneum, Mo., and other active or former mining and milling sites.

Instead of installing pollution-control technologies needed to reduce sulfur dioxide and lead emissions as required by the Clear Air Act, Doe Run will shut down the lead smelter in Herculaneum, and provide an initial $8.1 million in financial assurance to guarantee the cleanup work is complete, the government said.

The company added that it would close the smelter site by the end of 2013, ahead of the state's requirement of 2016. Work at that site will continue as part of a cleanup and repurposing of the facility, Doe Run said.

The company said the financial assurances aren't for the alleged violations.

"The financial assurances are for current obligations regardless of the agreement," Lou Marucheau, Doe Run's vice president of law, told Dow Jones Newswires in an email. "We have simply agreed to establish trust funds, to make money available when it is due, as a part of this agreement."

While Doe Run is spending some money more quickly as it shutters the Herculaneum smelter, the total amount will be funded over the life of the affected mines and mills, which is expected to be longer than 20 years.

"A substantial portion of the remaining amount is capital improvement related to concentrate-handling facilities at our four mills," Marucheau said.

St. Louis-based Doe Run is the largest integrated lead producer in the Western Hemisphere. It has operations in Missouri, Washington and Arizona.