LIMA: A World Bank panel has rejected an $800 million lawsuit filed against Peru for allegedly failing to clean up and take legal responsibility for pollution tied to a smelter in the South American nation, the Peruvian government said on Monday.
New-York-based Renco Group Inc sued Peru in 2011, accusing it of failing to clean the soil around the La Oroya smelter as promised when it was sold to the company in 1997. It also said Peru did not take responsibility for legal claims regarding past pollution tied to the smelter.
The World Bank's International Center for the Settlement of Investment Disputes (ICSID) ruled unanimously that Renco's claims must be rejected due to a lack of jurisdiction, Peru's finance ministry said in a statement.
Renco-owned Doe Run Peru had operated the smelter until the company ran out of money to buy concentrates in 2009.
It also lacked financing needed to finish an environmental clean-up and pay for upgrades to curb pollution.
Now controlled by Doe Run's former creditors, the smelter faces liquidation on Aug. 27 unless a new buyer is found.
Peruvian President-Elect Pedro Pablo Kuczynski has vowed to make the "strongest effort" to reopen the La Oroya smelter, saying it could process concentrates from several nearby mines.
Last week, Kuczynski proposed to lower Peru's air quality standards to spur investments in smelting and refining.
The La Oroya smelter was once the world's most diversified, churning out gold, silver, lead, zinc, copper and a dozen specialty metals. But it helped turn the town of La Oroya into one of the 10 most polluted places in the world, according to a 2007 report by the Blacksmith Institute, an environmental group.
Peru's finance ministry trumpeted the ruling as a success in the first dispute brought against the South American country under its free trade agreement with the United States.
Peru is also being sued in the ICSID by Canadian mining company Bear Creek over a silver project suspended after local protests turned deadly.
Gramercy Funds Management LLC filed a $1.6 billion suit against Peru last month over the country's 40-year-old land reform bonds.
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