New Doe Run liquidator will need to invest US $ 50 million for reactivation

The insolvency procedure of the mining company Doe Run Peru (DRP) has completed 12 years, and its liquidation 10. On December 21 the National Institute for the Defense of Competition and Intellectual Protection (Indecopi) will appoint the sixth liquidator of DRP.

A new liquidator would have to make an investment for the reactivation of the mine that is around US $ 50 million and for the La Oroya Metallurgical Complex not less than US $ 109 million, according to financial studies.

By 2022, new liquidator will no longer have cash flow, will face the risk that DRP will lose the mining and profit concessions due to the inability to pay those rights. In addition, resolutions to stop the Minem would fall due to the imminent non-payment of the guarantee of the closure plan.

Juan Cangalaya, advisor to the DRP Retirees AssociationHe pointed out that billing for S / 5,000 million in the past decade was useless. Today, 3,500 labor creditors were unemployed. Its production units: Cobriza and the La Oroya Metallurgical Complex (CMLO), are completely paralyzed. The national and international mining and metallurgical markets have not shown interest, five international auctions were left deserted ”, he indicated.

CAN SEE

With the dation in payment, Cobriza’s labor creditors and the CMLO will become owners. However, they reported that their insertion in the market would be very complicated due to the high investment of money they need for their reactivation.

“The stagnation of investment in mining makes it foreseeable that the Cobriza auctions will be deserted, unless two investment funds from France and England surprise with an offer. The new liquidator would have to foresee a “plan B” based on the dation in payment in favor of the labor creditors, as was agreed in the case of the CMLO, but the outdated bankruptcy law will put up fences, make the DEP unfeasible, propitiate rather, the scrapping of assets, ”Cangalaya explained.

In addition, they reported that three out of five liquidators who applied to Indecopi for their appointment, under the mechanism of «Liquidation Exchange», they have been left in the race. The Minem in a recent statement shows optimism without acknowledging that it is responsible for this crisis that will worsen further in 2022. Between 2021 and 2020 the liquidators were: Right Business, Profit, Dirige, Carrizales and Alta Sierra.

CAN SEE

Juan Cangalaya stated that the Government must determine a way of accompanying the entrepreneurship of companies that the labor creditors form with the capital contribution with the assets coming from the companies that fail, as is the case of Doe Run.

“Indecopi has proposed changes to the bankruptcy law, but they are insufficient. It is not contemplated that the participation of the State creditor, subtracts rather than adds to the liquidation and bankruptcy processes. A mechanism should be established so that the tax debt and state entities are put up for public auction. In the case of Doe Run the Minem has been a drag. In the Melgar and Alianza clubs, the sale of the state debt took unnecessarily many years ”, he concluded.