Doe Run Peru Says Mine Strike May Endanger Prompt Restart

LIMA, Mar 30, 2010 (Dow Jones Commodities News via Comtex) -- Doe Run Peru, a unit of U.S.-based Renco Group Inc., said Tuesday a strike at its Cobriza copper mine is endangering a "prompt restart" of its smelter operations.

The strike at Cobriza - which started March 23, according to Doe Run - is entering its eighth day and will continue despite the company's statements, said Luis Castillo, general secretary of Peru's National Federation of Mining. Castillo said the strike had been declared legal as of Monday.

Doe Run Peru's smelter, which normally produces copper, lead, zinc and smaller amounts of other metals, has been closed since June, when a cutoff in bank loans prevented the company from paying for metal concentrates.

Earlier this month Doe Run Peru said it had reached a deal with Glencore International AG (GNC.YY) that would allow it to restart smelter operations. The deal reportedly gave Doe Run about $100 million in financing.

In the Doe Run's statement, published in several national newspapers, the company described the strike at Cobriza as "irresponsible and without any justification."

It said the strike could "seriously affect" the "difficult situation" at Doe Run Peru, its current negotiations with concentrate providers and the prompt restart of smelter operations.

Last October Peru's government gave Doe Run 10 months to find financing and restart stalled smelter operations before the end of July this year. The 10-month extension is part of an overall 30-month extension that gives the company until early 2013 to meet its environmental cleanup deadline. The town of La Oroya is considered one of the most polluted places on earth.

Workers at the Cobriza mine are demanding, among other things, a production bonus, which the company says it cannot give because results at the mine and at Doe Run have not been "extraordinary." The strike at Cobriza, Peru's sixth largest copper mine last year producing 18,519 metric tons, is the second this year.

Peru is the world's No. 1 silver producer, and it is second in copper and sixth in gold.