Doe Run successfully backs Peru into a corner (again), and Peru responds as expected (again):
http://www.reuters.com/article/marketsNews/idUSN2445993520090924
Why this blog?
The La Oroya case is one that is bound by its own complexity. There is an unfortunate abundance of bias and misinformation, with apparent contradictions appearing at every corner. As a result, those in search of constructive solutions to the environmental and public health crisis in La Oroya lose precious time trying to make sense of it all. I created this blog in the hopes that the facts presented here will help those looking to bring progress to La Oroya, whether they be mining executives or grassroots activists. The three posts below are summaries of the major conclusions of my report on the La Oroya case. But first, some background:
Located nearly 180 kilometers to the east of Lima, the city of La Oroya sits high in the Central Peruvian Andes. Like other cities and towns in the region, La Oroya suffers from high poverty rates and poor access to education and basic health services. Unfortunately, these problems do not get nearly the attention they deserve, in part due to the constant distraction of the severe environmental contamination generated by the town’s economic lifeline: the La Oroya Metallurgical Complex.
From its first day of operation in 1922, the metallurgical complex has been polluting the air of La Oroya. Due to the topography of the region, temperature inversions cause environmental contamination to hover stagnant over La Oroya, as opposed to dispersing beyond the mountains as it would normally. And so, La Oroya’s roughly 35,000 residents are constantly exposed to harmful contaminants such as lead, arsenic, cadmium, and sulfur dioxide, among others.
The effects of such constant and prolonged exposure to the toxins in the air in La Oroya are wide-ranging. Some examples include: decreased intelligence quotient (IQ), irreversibly diminished neurological development, various forms of cancer, chronic pain in the back, abdominals, and bones, and severe damage to the respiratory system, among other severe effects.
While the people of La Oroya are clearly suffering from the effects of such persistent contamination, they are at the same time highly dependent on the metallurgical complex for their financial security. Doe Run Peru (DRP)—the current owner of the complex and a subsidiary of the Doe Run Company, the United States’ biggest lead producer—employs roughly 10% of the population. Those who don’t work for the company are almost always indirectly dependent on it in one way or another—either they live off of the salary of a family member who works at the smelter, or they own or work for a business that would suffer greatly if it were to close. Imagine every restaurant owner in La Oroya, every taxi driver, every shoe shiner, every hairdresser; they all depend on the smelting complex as a source of income for their customers. And so, closing the plant has the potential to send La Oroya’s citizens into poverty at a dizzying rate. As a result, every day the people of La Oroya have to make a choice—the choice between a safe and habitable environment, and an income which allows them to sufficiently feed themselves and their families. These are basic human rights; but in La Oroya it is as if they are mutually exclusive.
Also notable is Peru’s dependence on mining and foreign investment. Mining is the driving force behind Peru’s economic growth. In 2007, more than 60% of Peru’s export revenue was made up of mineral exports, which totaled more than $17 billion that year. The majority of said exports are mined and refined by foreign-owned companies or their subsidiaries. It is critical, then, to consider the effect that closing complexes like the one in La Oroya could have on foreign investment, the mining industry, and, potentially, the poverty rate of all of Peru.
These two dependencies—the micro (the former) and the macro (the latter)—are uncompromisingly central to the crisis in La Oroya and they are the reason I chose to make the La Oroya case my main case study in a broader research project examining Peru’s struggle to reconcile the need for environmental regulation with its dependence on mining and foreign investment.
What follows is a summary of my main conclusions after spending nine months in Peru studying the La Oroya case. The report will be released later this summer. Please send any and all questions or concerns to Corey.Laplante@gmail.com.
Located nearly 180 kilometers to the east of Lima, the city of La Oroya sits high in the Central Peruvian Andes. Like other cities and towns in the region, La Oroya suffers from high poverty rates and poor access to education and basic health services. Unfortunately, these problems do not get nearly the attention they deserve, in part due to the constant distraction of the severe environmental contamination generated by the town’s economic lifeline: the La Oroya Metallurgical Complex.
From its first day of operation in 1922, the metallurgical complex has been polluting the air of La Oroya. Due to the topography of the region, temperature inversions cause environmental contamination to hover stagnant over La Oroya, as opposed to dispersing beyond the mountains as it would normally. And so, La Oroya’s roughly 35,000 residents are constantly exposed to harmful contaminants such as lead, arsenic, cadmium, and sulfur dioxide, among others.
The effects of such constant and prolonged exposure to the toxins in the air in La Oroya are wide-ranging. Some examples include: decreased intelligence quotient (IQ), irreversibly diminished neurological development, various forms of cancer, chronic pain in the back, abdominals, and bones, and severe damage to the respiratory system, among other severe effects.
While the people of La Oroya are clearly suffering from the effects of such persistent contamination, they are at the same time highly dependent on the metallurgical complex for their financial security. Doe Run Peru (DRP)—the current owner of the complex and a subsidiary of the Doe Run Company, the United States’ biggest lead producer—employs roughly 10% of the population. Those who don’t work for the company are almost always indirectly dependent on it in one way or another—either they live off of the salary of a family member who works at the smelter, or they own or work for a business that would suffer greatly if it were to close. Imagine every restaurant owner in La Oroya, every taxi driver, every shoe shiner, every hairdresser; they all depend on the smelting complex as a source of income for their customers. And so, closing the plant has the potential to send La Oroya’s citizens into poverty at a dizzying rate. As a result, every day the people of La Oroya have to make a choice—the choice between a safe and habitable environment, and an income which allows them to sufficiently feed themselves and their families. These are basic human rights; but in La Oroya it is as if they are mutually exclusive.
Also notable is Peru’s dependence on mining and foreign investment. Mining is the driving force behind Peru’s economic growth. In 2007, more than 60% of Peru’s export revenue was made up of mineral exports, which totaled more than $17 billion that year. The majority of said exports are mined and refined by foreign-owned companies or their subsidiaries. It is critical, then, to consider the effect that closing complexes like the one in La Oroya could have on foreign investment, the mining industry, and, potentially, the poverty rate of all of Peru.
These two dependencies—the micro (the former) and the macro (the latter)—are uncompromisingly central to the crisis in La Oroya and they are the reason I chose to make the La Oroya case my main case study in a broader research project examining Peru’s struggle to reconcile the need for environmental regulation with its dependence on mining and foreign investment.
What follows is a summary of my main conclusions after spending nine months in Peru studying the La Oroya case. The report will be released later this summer. Please send any and all questions or concerns to Corey.Laplante@gmail.com.
Increased contamination since Doe Run’s arrival.
Doe Run and its supporters often site so-called “dramatic reductions” in contamination levels when defending against claims that the company has neglected its environmental responsibilities in La Oroya. The truth is that, over the last few years, Doe Run has reduced contamination. The problem, however, is that the DRP’s reduction of contamination levels is, for the most part, relative to its own worsening of the situation since 1997, the year it arrived in La Oroya.
A good example is the graph that Doe Run Peru sent CNN for December’s Planet in Peril piece. The graph claims that DRP has reduced lead contamination by 77%. The graph compares 2008 against 1997. That is to say, they are pointing out that lead contamination is 77% lower in 2008 than it was in 1997. I confirmed the numbers with the Ministry of Energy and Mines--the reduction does, in fact, amount to 77%.
1997, however, is the year that Doe Run came to La Oroya and dramatically increased contamination levels (see Anna Cederstav's "La Oroya Cannot Wait", pages 37-52). They have only reduced contamination relative to when they increased it before.
If we really want to measure the changes in La Oroya—absolute changes as opposed to relative—we need to look at the situation as it was before Doe Run came to town.
I have the information for the same monitoring station that DRP used to derive the 77% figure—Sindicato. And when I compared 2008 against 1995 (instead of using 1997 as the baseline), I found that lead contamination at the Sindicato monitoring station did not decrease by 77%. In fact it increased--by 6%.
At another monitoring station, Casaracra, lead contamination increased by 28% since 1995. And at Hotel Inca, lead contamination increased by 255%. That is not a typo: two hundred and fifty five percent.
To be fair, at one of the four monitoring stations that I surveyed, Huanchan, lead levels were reduced by 51%. It should be noted, however, that such a reduction only brought contamination at Huanchan down to a level that is still ten times above the maximum limit set by the World Health Organization.
The point here is that if we are to accurately evaluate progress in La Oroya, we must make absolute comparisons. Relative drops in contamination tell only a partial truth and have the potential to mislead.
A good example is the graph that Doe Run Peru sent CNN for December’s Planet in Peril piece. The graph claims that DRP has reduced lead contamination by 77%. The graph compares 2008 against 1997. That is to say, they are pointing out that lead contamination is 77% lower in 2008 than it was in 1997. I confirmed the numbers with the Ministry of Energy and Mines--the reduction does, in fact, amount to 77%.
1997, however, is the year that Doe Run came to La Oroya and dramatically increased contamination levels (see Anna Cederstav's "La Oroya Cannot Wait", pages 37-52). They have only reduced contamination relative to when they increased it before.
If we really want to measure the changes in La Oroya—absolute changes as opposed to relative—we need to look at the situation as it was before Doe Run came to town.
I have the information for the same monitoring station that DRP used to derive the 77% figure—Sindicato. And when I compared 2008 against 1995 (instead of using 1997 as the baseline), I found that lead contamination at the Sindicato monitoring station did not decrease by 77%. In fact it increased--by 6%.
At another monitoring station, Casaracra, lead contamination increased by 28% since 1995. And at Hotel Inca, lead contamination increased by 255%. That is not a typo: two hundred and fifty five percent.
To be fair, at one of the four monitoring stations that I surveyed, Huanchan, lead levels were reduced by 51%. It should be noted, however, that such a reduction only brought contamination at Huanchan down to a level that is still ten times above the maximum limit set by the World Health Organization.
The point here is that if we are to accurately evaluate progress in La Oroya, we must make absolute comparisons. Relative drops in contamination tell only a partial truth and have the potential to mislead.
The PAMA.
In 1993, the Peruvian government established regulations requiring the implementation of two environmental management tools, one of which was the Environmental Mitigation and Management Plan (PAMA for its initials in Spanish). The PAMA is a report detailing the collective actions and investments necessary for the reduction or elimination of environmental contamination to the point of compliance with government-established limits. In theory, the PAMA lays out exactly what a company will do in order to comply with government standards and how much they will have to spend to do so.
Some look at the amount of money spent on PAMA projects and conclude that DRP is doing all that they can. In order to accurately evaluate Doe Run’s behavior with respect to the PAMA, there are several additional points worth examining. Although the amount of money Doe Run is spending on the PAMA has been disclosed, and it is quite large (easily over $300 million), there are questions as to how that money is spent. Some of the PAMA money goes towards things like studies for projects that are never brought to fruition, and a 2005 congressional investigation found that more than 25% of the PAMA investment that Doe Run Peru had agreed to consisted of costs and payments that could not justifiably be included, such as administrative costs, and capital investments coming from the Doe Run Company in St. Louis. That means that one fourth of PAMA investments up to that point were spurious.
Another point to consider concerning PAMA investment: when Doe Run Peru applied for its controversial PAMA extension, the central justification was financial—they just did not have the money on hand, they claimed. However, when a Peruvian business school conducted a major study on the PAMA extension request, it was discovered that between 1997 and 2004, Doe Run Peru sent more than $95 million home to the Doe Run Company—enough to have paid for 88% of the original PAMA investment. Doe Run Peru has yet to sufficiently explain exactly why this money needed to be sent home. Instead, the company line is simply that it had to do with “obligations that Doe Run Peru had with its mother-company”
Lastly, there is a fundamental question that is being ignored: Is the PAMA even sufficient in the first place? Will it make the air safe to breathe for the people of La Oroya? Most signs point to no. Dr. Anna Cederstav, the Ph.D chemist who has been working on the La Oroya case for the last ten years, had this to say when interviewed:
“Given the lack of data and air quality modeling behind the studies presented by DRP, and upon which the revised PAMA was based, it is uncertain, at best, whether even 100% implementation of the PAMA will result in air quality that meets international health standards. More likely, the company and government will find that in spite of improvements, there is no technical fix by which to reduce smelter emissions enough to make neighborhoods near the smelter truly safe for children.”
Dr. Cederstav is not alone. In May of 2006, a committee of experts, asked to conduct an independent evaluation of DRP’s request for a PAMA extension, said the following:
“It is the opinion of the panel that granting the PAMA extension and implementing the DRP process improvement programs will not, by themselves be sufficient to resolve the La Oroya region community health problems.”
These are just some among a chorus of voices attesting to the PAMA’s insufficiency. Such voices must be kept in mind when evaluating DRP’s progress in La Oroya.
Some look at the amount of money spent on PAMA projects and conclude that DRP is doing all that they can. In order to accurately evaluate Doe Run’s behavior with respect to the PAMA, there are several additional points worth examining. Although the amount of money Doe Run is spending on the PAMA has been disclosed, and it is quite large (easily over $300 million), there are questions as to how that money is spent. Some of the PAMA money goes towards things like studies for projects that are never brought to fruition, and a 2005 congressional investigation found that more than 25% of the PAMA investment that Doe Run Peru had agreed to consisted of costs and payments that could not justifiably be included, such as administrative costs, and capital investments coming from the Doe Run Company in St. Louis. That means that one fourth of PAMA investments up to that point were spurious.
Another point to consider concerning PAMA investment: when Doe Run Peru applied for its controversial PAMA extension, the central justification was financial—they just did not have the money on hand, they claimed. However, when a Peruvian business school conducted a major study on the PAMA extension request, it was discovered that between 1997 and 2004, Doe Run Peru sent more than $95 million home to the Doe Run Company—enough to have paid for 88% of the original PAMA investment. Doe Run Peru has yet to sufficiently explain exactly why this money needed to be sent home. Instead, the company line is simply that it had to do with “obligations that Doe Run Peru had with its mother-company”
Lastly, there is a fundamental question that is being ignored: Is the PAMA even sufficient in the first place? Will it make the air safe to breathe for the people of La Oroya? Most signs point to no. Dr. Anna Cederstav, the Ph.D chemist who has been working on the La Oroya case for the last ten years, had this to say when interviewed:
“Given the lack of data and air quality modeling behind the studies presented by DRP, and upon which the revised PAMA was based, it is uncertain, at best, whether even 100% implementation of the PAMA will result in air quality that meets international health standards. More likely, the company and government will find that in spite of improvements, there is no technical fix by which to reduce smelter emissions enough to make neighborhoods near the smelter truly safe for children.”
Dr. Cederstav is not alone. In May of 2006, a committee of experts, asked to conduct an independent evaluation of DRP’s request for a PAMA extension, said the following:
“It is the opinion of the panel that granting the PAMA extension and implementing the DRP process improvement programs will not, by themselves be sufficient to resolve the La Oroya region community health problems.”
These are just some among a chorus of voices attesting to the PAMA’s insufficiency. Such voices must be kept in mind when evaluating DRP’s progress in La Oroya.
Blood-lead levels.
Lead-poisoning has been at the center of attention in La Oroya for years—so much so that the children of La Oroya are commonly referred to as “Children of Lead”. And so, the annual results of blood-lead level (BLL) studies could theoretically be used as a measure of progress (or lack thereof) in La Oroya. Unfortunately, however, some such studies have proven inconsistent and even unreliable.
From 2004 to 2008, Doe Run Peru, the Regional Government of Junín, and the Ministry of Health have collaborated on a series of BLL studies in La Oroya. Specifically, they averaged blood-lead levels for children under six years of age in La Oroya. At first glance, the results of these surveys are encouraging—they show a reduction of almost 35% in blood-lead levels from 2004 to 2008. Further investigation, however, shows the results to be questionable.
In 2004, 100% of the blood samples used in the study were taken in La Oroya Antigua, the town closest to the smelting complex, where lead exposure is known to be by far the highest. In each of the following years, however, the study began to include other parts of La Oroya. By 2008, the study included samples from children in La Oroya Nueva, Paccha, Huari, and Santa Rosa de Sacco—all of which are located further away from the complex than La Oroya Antigua and therefore more likely to have lower blood-lead averages than La Oroya Antigua. The fact that there was no geographic consistency in sampling from year to year means that the data is not reliable for determining trends in blood-lead levels.
Blood-lead levels are significantly higher in La Oroya Antigua than they are in surrounding parts of La Oroya. According to a 2005 study, for example, the average blood-lead levels for children six years and younger was 36.1 in La Oroya Antigua, and 23.2 in the rest of La Oroya. This is a significant difference—certainly significant enough to bring down the overall averages.
The results of the 2008 studies cannot be reliably compared to those of 2004. DRP, the Junín government, and the Ministry of Health should release a direct comparison for the 2004/2008 numbers in for each part of town, separately. I was able to make such a comparison, but only for years 2004-2006. In those years, blood-lead levels in La Oroya Antigua increased by 3%, to 33.47 micrograms per deciliter. That is more than three times the maximum limit set by the WHO, the CDC, and other international organizations.
From 2004 to 2008, Doe Run Peru, the Regional Government of Junín, and the Ministry of Health have collaborated on a series of BLL studies in La Oroya. Specifically, they averaged blood-lead levels for children under six years of age in La Oroya. At first glance, the results of these surveys are encouraging—they show a reduction of almost 35% in blood-lead levels from 2004 to 2008. Further investigation, however, shows the results to be questionable.
In 2004, 100% of the blood samples used in the study were taken in La Oroya Antigua, the town closest to the smelting complex, where lead exposure is known to be by far the highest. In each of the following years, however, the study began to include other parts of La Oroya. By 2008, the study included samples from children in La Oroya Nueva, Paccha, Huari, and Santa Rosa de Sacco—all of which are located further away from the complex than La Oroya Antigua and therefore more likely to have lower blood-lead averages than La Oroya Antigua. The fact that there was no geographic consistency in sampling from year to year means that the data is not reliable for determining trends in blood-lead levels.
Blood-lead levels are significantly higher in La Oroya Antigua than they are in surrounding parts of La Oroya. According to a 2005 study, for example, the average blood-lead levels for children six years and younger was 36.1 in La Oroya Antigua, and 23.2 in the rest of La Oroya. This is a significant difference—certainly significant enough to bring down the overall averages.
The results of the 2008 studies cannot be reliably compared to those of 2004. DRP, the Junín government, and the Ministry of Health should release a direct comparison for the 2004/2008 numbers in for each part of town, separately. I was able to make such a comparison, but only for years 2004-2006. In those years, blood-lead levels in La Oroya Antigua increased by 3%, to 33.47 micrograms per deciliter. That is more than three times the maximum limit set by the WHO, the CDC, and other international organizations.
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