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Peru's Kuczynski to Try to Reopen La Oroya Smelter

FILE - Mining workers of Doe Run Peru protest in front of the Labor Ministry in Lima to demand that Peru's government save their jobs at the shuttered La Oroya metals smelter in the Andes, April 19, 2012.

Peru President-elect Pedro Pablo Kuczynski vowed Wednesday to make his "strongest effort" to reopen the polymetallic smelter at La Oroya, part of his goal of wringing more value out of the country's key mineral exports.

The former operator of the smelter, Doe Run Peru, owned by U.S.-based Renco Group Inc., halted operations at La Oroya in 2009 when it ran out of money to buy concentrates. The company also lacked financing needed to finish an environmental cleanup and to pay for upgrades to curb pollution.

Now controlled by Doe Run's former creditors, the smelter faces liquidation on August 27 unless a new buyer is found.

"La Oroya is dying and we have to change that. We have to give it oxygen, oxygen from investors," Kuczynski said in televised comments before a crowd in La Oroya, where former workers have held rallies to demand operations resume.

"You have my word that I'll make my strongest effort to push this out!" Kuczynski said to cheers. The former investment banker, 77, takes office July 28.

March to Lima

Kuczynski asked La Oroya residents to march to Lima to help him press the incoming opposition-controlled Congress to extend the liquidation deadline. He did not say what he would do to make the smelter, which opened in 1922, more attractive.

Kuczynski's party will have just 18 lawmakers in the 130-member Congress, threatening his proposed reforms. The party of his defeated rival, Keiko Fujimori, will hold 73 seats.

Kuczynski wants Peru to become a refining and smelting hub to boost its copper, zinc, tin, gold and silver exports as slumping prices drag on growth. His first trip abroad as president will be to China to talk with officials about potential partnerships on refineries.

La Oroya, 140 kilometers (87 miles) from Lima in central Peru, could process concentrates from several nearby mines, Kuczynski said. Toromocho, operated by Chinese miner Chinalco Mining Corp. International, is the biggest copper deposit near the La Oroya smelter.

"When minerals are refined here, their value will go up. There's a margin of about $400 million that we can recover," Kuczynski said.

The smelter was once the world's most diversified, churning out gold, silver, lead, zinc, copper and a dozen specialty metals. But it turned La Oroya into one of the 10 most polluted places in the world, according to a 2007 report by the Blacksmith Institute, an environmental organization.