Doe Run Peru laughs in the face of the government of Peru

The latest chapter of a long running disaster.

Any self-respecting country would have long expropiated and nationalized Doe Run Peru (DRP), kicked out the liars, thieves and environmental masters of disaster headed up by US Billionaire Ira Rennert and got the plant cleaned up, opened again and running to world safety standards. But not Peru. The lilly-livered US kowtow merchants of the Twobreakfasts government have just let themselves be pushed around with threats of international court actions and watched as DRP have laughed in the faces of "final demands" that are swiftly followed by "final final demands" then "honestly, this is the real final demand and we're not joking" etc etc ad infinitum that comes from the hand-tied mining ministry.

Another chapter happened this week, when the shamelessness of DRP showed through as the company demanded four concessions from the government, after which it would consider opening its smelting complex again. Those included yet another delay to the über-necessary enviro clean up plan (natch), but one of the demands was even better than that. We'll hand over to the (translated) words of mining and energy minister Pedro Sanchez, found in the official MEM press release:

"What the company is looking for with this request is that the main shareholder and companies related are protected against any judicial demand concerning envionmental responsibility, this because in the United States it is facing several lawsuits claiming damage of children's health in La Oroya due to levels of lead in their blood.

"In other words, it is asking that the government of Peru protects it against any legal action, because it is also asking that these lawsuits in US courts are passed to Peru (courts)."

According to the Energy Ministry press release, debate on just this single point took up nearly all the of two hours programmed for the meeting between DRP and the government.

Otto sez that with presidential elections and a changing of the guard coming up in just a year's time, DRP is now playing with fire. The expropriation of DRP at La Oroya could easily become an election issue and one that's backed by multiple candidates and not just the most reactionary ofthe bunch. This author for one would love watching Ira get a taste of the medicine he so richly deserves, FTA with the US or not.

The sad, continuing story of Doe Run Peru

It's difficult to explain just how much of a snafu the Twobreakfasts government has made of Doe Run Peru (DRP) but the latest chapter, written last night, should come as no surprise. Basically there are three actors in this play:

• Ira Rennert, billionaire owner of Genco who are in turn the owners of DRP. He's a piece of crap but at least he's a predictable piece of crap; he dosn't care about anything but the money.

• The workforce of DRP. They just want their jobs back.

• The government of Peru that has tried to be play at governance and authority and has been laughed off the stage. The result has been death, mayhem and inertia.

Twobreakfasts&Co has tried to play the strongman card about the environmental regulations that DRP has to comply with by the end of October.

"You must comply with the October 2009 deadline", says Twobreakfasts.

Ira says, "screw you, we want 32 extra months".

This extension comes on the back of a previous extension that he totally ignored, so there's no reason to believe he'll clean up DRP this time, either. So the government decides to "be flexible" (read KY Jelly) and give DRP 20 months to do its cleanup program.

"Screw you", says Ira. "I said 32 months, you bunch of wimps."

So continues the impasse. Meanwhile, Ira rallies his troops on site and tells them to strike again to demand that the government caves in and gives DRP the 32 month extension. This they do (out of fear for losing jobs and desire to get back to earning a salary). The main road is blocked, the police move in and last night yet another police officer dies on the scene when hit by rocks pushed on to their position by the strikers.

Rule of law? Rule of $$$$$. The senseless, toothless, wet blanket government of Peru still has no idea what it's up against. In the Wild West of neoliberal Peru, Ira's money talks and Twobreakfasts' bullshit walks. There is no national pride, because if there was Ira Rennert would have been kicked out of the country and his assets seized months ago. The cowards that run Peru bow and scrape before the altar of investment grade at all costs.

Doe Run Peru declares insolvency

Well what a surprise.

Citing a "serious financial problem" (as well as getting no love for an extension to the time given by Peru to clean up the shithole of its own making called 'La Oroya',) Doe Run Peru this evening declared itself insolvent. This despite record demand, production and profit margins for smelting companies in the five year period to 2008 in Peru. How can all the other businesses in the mining sector make oodles of profit and DRP say it's deep in debt without being totally stripped bare of cash by its owner?

Or in other words, Ira has got your money and he isn't going to pay any stupid debt when a dumbass government will pay it for him. "Gringo Screw-You Capitalist Takes Wannabe Third World Country To The Cleaners" is hardly an original story, but it works here as well as it has in the other 56 squillion occasions.

Peru, you've been had as a bunch of suckers. Welkome to kapitalism komrades, now clean up the mess.

UPDATE: Interestingly, Peru's über pro-gov't paper El Comercio has just changed its headline on this story from "Doe Run Declares Insolvency" to a much milder-sounding "Doe Run Enters Process of Restructuring" on the same link above (the original title is now lost). The editor of this lapdog must have received squeals of horror from APRA.

What Twobreakfasts can learn from Samuel Beckett

When Samuel Beckett’s Waiting For Godot exploded on to the London stage 50 years ago, it shocked as many people as it delighted. There had never been a play like it; two men clowning around, joking and arguing, repeating themselves, as they wait through one day and then another, waiting for the mysterious Godot. The combination of music hall, poetry and tension redefined what is possible in theatre, so that these days, Waiting for Godot is accepted as one of the most significant plays of the 20th century.

In Godot We Trust, Davis Smith, The Observer, March 2009

Today we have another episode in the Doe Run Peru (DRP) tragicomedy, with Peru's Ministry of Energy and Mines yesterday saying that it's waiting on an offer from Ira Rennert, Renco and DRP. Here's how BNAmericas reported it last night:

Peru's energy and mines ministry (MEM) is waiting for a "serious proposal" from Doe Run Perú to consider extending the company's deadline for meeting environmental improvement requirements, known as PAMA, at its La Oroya smelter, MEM said in a statement.

Obviously, Beckett's seminal work Waiting for Godot just sprang to mind of your correspondent. Y'see, Peru just doesn't get it. They seem to think they an negotiate a deal that gets cash out of a billionaire mega-capitalist for some vague environment and social cause. Last month Rennert's side sat down and offered between $31m and $38m, depending on which source you read. It also wants yet another extension to its environmental cleanup deadline.

Meanwhile, Peru at least recognizes that the $30-odd million wouldn't actually be put down by Rennert but come out of tax breaks and government loans to the company; in fact that $38m or so wouldn't cost Rennert a penny. So Peru is insisting that Rennert comes up with $100m to get a deal done. In the words of deputy mining minister Fernando Gala, Rennert "... must inject cash for the smelter".

Must? MUST? Peru will be waiting as long as Vladimir and Estragon did for the deal it thinks it can get cos the poor saps now getting a large taste of "the amerikan way" have no idea who they're dealing with. It's kinda embarrassing to watch how the innocent neoliberal ideals that Peru wants to follow are making it lose all sense of national pride. Damn, if Rennert tried this kind of tactic with Correa's Ecuador, or Morales' Bolivia, or Chávez's Venezuela the only word he'd hear by way of reply is "expropriation".

The only reason that Twobreakfasts doesn't do what any self-respecting leader would do is that he's just too keen on keeping in the USA's good books. The country is being screwed over by the hardest of hard-edged capitalists and they actually think they'll reach a compromise on this? Gimme a break! There are only two possible outcomes to any "negotiation":

1) Rennert gets Peru to cave in and take his offer
2) Rennert walks, declares DRP bankrupt and Peru picks up the bill anyway.

Sad to watch. So just expropriate now, Twobreakfasts. Make a point, do the right thing, assume the company onto state books and get the thing back to work. And go to the theatre more often cos you might just learn something about human nature that'll help you run the country in a better way.

The Doe Run Peru farce and its latest chapter

Met him on a Monday and my heart stood still
De Doe Run Run Run, De Doe Run Run
Somebody told me that his name was Ira
De Doe Run Run Run, De Doe Run Run

• We have an owner, Ira Rennert, who just doesn't give a monkey's. He's got the money and he'll be damned if he's giving any of it back.
  

• We have a government run by a born-again neolib that couldn't possibly go back to his roots and face the plain fact that his country needs to expropriate and take over Doe Run.

• We have a mining ministry stuck between Twobreakfast's dogma and Rennert's barefaced capitalistic middle finger stuck in its face.

• We have a whole bunch of workers that are protesting and cutting roads because they want to work, earn money and put a meal on their family table. They don't have any issues here except 'allow me to do a day's labour'. They even take the pollution in their stride.
  

But now, in true Rosencrantz and Guildenstern farce-amongst-tragedy style, we have Peru's SNMPE (The mining society people who do little but organize cocktail parties in The Republic of Lima) sticking their dos centavos into the mix and making Ira not quake in his boots about his rescinded membership card. The most pitiful thing is that the SNMPE really thinks it's shaking up the world with this move, the pity only matched Chez Otto by the idiot reporters who think this is worthy of headlines. NOBODY CARES . Here's BN Americas with the details:

Peru's national oil, mining and energy society SNMPE has suspended US-owned Doe Run Perú's rights as a member for non-compliance with the society's code of conduct.

The code of conduct requires companies to use mineral resources responsibly, make real and measurable contributions to the community, conduct business in an economically and socially sustainable manner, and fully observe the country's laws and norms.

SNMPE has sent a letter to Doe Run Perú communicating the decision, according to state news agency Andina.

The suspension could be followed by the company's full exclusion from SNMPE if it does not complete a series of cleanups and modernizations, called PAMA initiatives, at its La Oroya polymetallic smelter. Doe Run has an October 31 deadline to fulfill its PAMA obligations Continues here

Ira Rennert buys Twobreakfasts a present

The thought of caving in to his own people must be far too much to bear, so Twobreakfasts has decided to drop his trousers and prostrate himself at the altar of gringo capitalism....again. Rather than do what any prez with cojones would do, i.e. kick the scamster Rennert out of the country and seize his assets until he comes up with the cash Ira's siphoned from Doe Run Peru (DRP) all these years, Twobreakfasts is going to give Ira and his messy pals yet another extension to the timeline for cleaning up DRP at La Oroya (one of the ten most polluted places on earth according to the Blackstone Institute). Ira won't give a damn about the new deadline either...he just wants the money. Here Reuters;

Peru says may give Doe Run more time for clean up

LIMA, June 23 (Reuters) - Peru's government said on Tuesday it may give troubled Doe Run Peru more time to complete an environmental clean up of its La Oroya smelter as it tries to persuade the company to meet the terms of a financial bailout plan.

Banks canceled the company's credit lines about four months ago after metals prices fell. In April, a group of mining companies that sell concentrates to Doe Run Peru agreed to give it a $175 million credit line if its parent company, U.S.-based Renco Group, met two conditions.

The stipulations were that Renco had to fill a $156 million financial shortfall in its Peruvian unit and pledge its shares to the Peruvian government as a way of promising that its unit would finish an environmental cleanup project at one of the world's most polluted sites.

So far, the conditions haven't been met.

"The government has said that we could evaluate the environmental issue, which appears reasonable, but we won't extend it for five years or three years, we will reach for something more adequate," Labor Minister Jorge Villasante said on yada yada continues here

Doe Run Peru: Showtime

Workers at Doe Run Peru (DRP) are going on indefinite strike at La Oroya, Peru as of 10pm tonight.

This represents a significant acceleration in the ongoing dispute at the plant which is already closed due to lack of funds. What's happening is, in a nutshell, the workers fed up with the patsy patsy game of negotiation going on between owners Renco (owned by Ira Rennert) the Peruvian government and clients of the smelter (i.e. regional metals miners) and demanding action. They don't want to be laid off for the next 90 days as is the current plan. They want their jobs back.

This isn't a case of protestors stopping industry; au contraire, it's a case of a workers' movement sick to death with the intransigence of the suited brigade and getting busy to force them into a deal. But it also means that the strike could get nasty, as if the protestors get militant and start blocking the main central highway that runs through La Oroya (well, just next to it in fact) there are (according to reports) already anti-riot police on hand to make sure this vital link road is kept open.

Doe Run: It's become so obvious that even the Gov't of Peru is getting the picture now

Pedro Sánchez (for it is he)

Linked here is an interview in today's El Comercio with Peru's Minister of Energy and Mines, Pedro Sánchez. It's also and example of why I read El Comercio so much, because despite the fact the media channel is mind-numbingly sycophantic towards its government (and especially this time round as APRA will always return favours) it also gets to be the invited source when the gov't wants to send out a message. Today we get the Twobreakfasts admin wanting to send one of those messages to those at Renco about Doe Run Peru (DRP) at La Oroya, currently totally shut down because no miner is stupid enough to send their concentrates there for smelting cos they know they won't get paid. So today we get a minister interviewed by a Comercio dude.

The interview is very good in fact, and if you know how to read into what's being said here what we have is Peru telling Ira Rennert "you either put up or you lose the deal, cos this goes no further." If there's one line that symbolizes this it's the last Q&A (translated here):

El Comercio: However the mining company (i.e, DRP) says it's impossible for it to get financing funds (to comply with its obligations).

Pedro Sánchez: Doe Run is a private company. It seems not to understand this because it's asking all the world to help it out, but it won't aloow itself to be helped."

Now that might not sound too polemic to your ears, kindly lector of IKN, but from the soft-spoken and calm mouth of Pedro Sánchez (who, it has to said, is a pretty good minister in the Twobreakfasts gov't...a rare thing indeed) is a very clear message...perhaps reading the whole interview will give you a better idea but you'll need to be hispanically unchallenged for the whole caboodle. By the way, the report was smart enough to pick up on this last Q&A and use it as his headline, too.

So we're now at the totally predictable endgame at DRP. Even the laggards in the higher ends of power have realized they've been played all this time by the despicable Rennert. I'll be the one cheering if they do the courageous thing, namely expropriate DRP and make it a state run company.

This will not count in the GDP figures, of course

Alex Emery of Bloomie neatly sums up the main story behind the Doe Run closure today without pointing too much finger at the real culprit, Michael B's pal Ira Rennert. Rennert's company, Renco, and the Peruvian government came to a hashy sort of agreement weeks ago, but (as predicted by IKN) Renco has simply refused to put in the money the company needs to bring it back to some sort of creditworthiness. Here's Bloomie:

Doe Run Peru Shut 100% of Zinc Smelter Operations (Update1)

By Alex Emery. June 2 (Bloomberg) -- Doe Run Peru has shut all of its smelter operations after it failed to reach an agreement with banks and mining suppliers, a union official said today.

The company, a unit of New York Renco Group Inc., is unable to buy concentrates for its La Oroya zinc and lead smelter and can’t pay its 3,700 workers, Mining Federation General Secretary Luis Castillo said today.

“The smelter is closed,” Castillo said in a telephone interview. “The company and the government don’t want to solve this problem, which will cost workers their jobs.”

Banks froze Doe Run’s accounts on Feb. 24 after metal prices collapsed amid the global recession. Doe Run says it needs more time to settle its debts and invest in an environmental cleanup, which has cost the company $300 million since it took over a smelter in Peru in 1997.

Deputy Mining Minister Felipe Isasi said May 20 that the government has set an Oct. 31 clean-up deadline and may fine the company if it fails to comply.

Zinc and lead have both fallen in London by at least a third since March 2008. Peru is the world’s third-largest zinc producer and fourth-biggest for lead.

Chart of the day is....

....the amount of money the gov't of Peru just handed over to Doe Run Peru (DRP) to avoid closing the plant compared to the amount of money DRP still needs to spend on its much delayed environmental cleanup program that has October 31st, 2009 as its completion deadline.


There has been much talk in Peru about whether or not DRP should be given a bailout by its host government, however yesterday's decision was predicted as inevitable nearly two weeks ago by IKN. DRP's owner, Ira Rennert, knew from the start that the continuance of DRP is more important to Peru than to him. He's made his money, screwed the environment and vacuumed his company clean; why on earth should he actually be responsible and leave working capital inside the company for some idiocy such as "helping people" or "being responsible"? That's just silly Socialist talk!

It is frankly incredible that DRP as an asset isn't expropriated from this uncaring and unfeeling crook. Knowing the totally corrupt core of the García government, you have to wonder just how muh money has changed hands in unmarked envelopes over DRP.

An excellent and roundup of the DRP story in the last few days can be found right here at the evergood Huanca York Times.

Doe Run Peru: The truth will out

Reuters knocks one straight out the park. Here's the link and below is the story.

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Doe Run Peru faces renewed environmental criticism

Thu Mar 26, 2009 3:43pm EDT

LIMA, March 26 (Reuters) - With Doe Run Peru nearly shuttered amid sliding metals prices and tight credit, a Peruvian environmental group has released a new study saying the company dragged its feet on cleaning up the town around its smelter in La Oroya.

The company halted 95 percent of work this week at its sprawling plant after banks cut its credit lines, strangling its ability to buy concentrates.

The government is weighing whether to give Doe Run a $75 million bailout to save thousands of jobs. The government is also mulling whether to grant it an extension to meet terms of an environmental cleanup plan for La Oroya, long ranked as one of the world's most polluted cities.

"It's dirtier now than it was before," said Corey Laplante, a U.S. Fulbright scholar at the Peruvian Society for Environmental Law who led the study.

"If the government is going to give this bailout, it needs to attach a number of conditions: more transparent financial reporting, stronger public-participation mechanisms and stricter air-quality standards," he told Reuters.

Doe Run says it has been lowering emissions of polluting metals since it bought the smelter in 1997 from an old state-run company.

But Laplante says official data shows pollution has risen over a longer time frame, going back to 1995.

Using information from the Sindicato station that monitors lead in the air, Doe Run has said pollution fell 77 percent between 1997 and 2008.

Laplante says using 1997 as a baseline is misleading because pollution spiked that year, making pollution in subsequent years look low. When 1995 is used as the baseline, pollution at the station actually rose 6 percent through 2008, he said.

Victor Andres Belaunde, a Doe Run official, said data collected before 1997 may not be reliable, and the company cannot use data collected before it owned the smelter in its environmental compliance program.

When Doe Run bought the smelter -- which produces copper, zinc, lead and precious metals -- it was told it would need to spend little a more than $100 million to bring La Oroya into environmental compliance and solve a public health problem.

So far, Doe Run says it has spent $307 million, and that the total cost will end up being $500 million.

The compliance program still has not been completed. Initially, it was expected to take 10 years, but in 2006, the company got a three-year extension and now the government is being asked to grant another one.

Doe Run says the clean up job has turned out to be bigger than it thought.

Critics say it is stalling and that the company's owner, New York billionaire Ira Rennert of the Renco Group, has the money to accelerate the clean up.

But Peru has prohibited Rennert from taking profits out of Doe Run until the environmental program is complete. Now that work has halted at the plant, the future of a cleanup that was being financed by cashflows hangs in the balance.

Unmissable information on Doe Run Peru

Chernobyl, anyone? This bizarre mashup photo is
actually part of DRPs promo propaganda

US citizen and Fulbright Scholar Corey Laplante has been living in Peru and studying the operations at Doe Run Peru (DRP) for around eight months. He has a blog (that I recently discovered) and last night posted this article about the operational situation at DRP.

Thus the scales fall from mine eyes. All this time I fell for the DRP line. I was wrong.

This is seriously, seriously unmissable reading. Laplante shoots down in flames the company propaganda about how the place is cleaner than before. Also, this guy is not speaking from some treehugging NGO save the planet prejudiced playbook about DRP, but has done some very solid research work on the company. What he has found has made him angry. Damn I'm angry, too.

You should be angry too, when a shit like Ira Rennert takes over a company, significantly increases poisonous pollution outputs, then uses his first year at the site for his own benchmark thus later falsely claiming reductions in pollution. Here's an excerpt from Corey's post, but I strongly recommend that you read the whole thing. Here's the link to Corey's post again, just to make sure you go.

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3) You site “dramatic reductions” in contamination levels. Over the last few years Doe Run has reduced contamination. In fact, according to a graph that they sent CNN for December’s planet in Peril piece, they have reduced lead contamination by 77%. Wow. Seems impressive right? Trust me I know—I was fooled too (see some of my earlier posts)

When we look a little more closely however, we see what is really going on here. The graph that Doe Run sent to CNN 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%

BUT, 1997 is the year that Doe Run came to La Oroya and dramatically increased contamination levels. 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—we need to look at the situation as it was before Doe Run came to town. Luckily, I was able to get my hands on this information. Specifically, 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, Hotel Inca, lead contamination increased by 255%. That is not a typo. 255%.

Continues here

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Once again, I am in debt to reader MH. Thank you. There will be more on Doe Run and the (looking like it's about to happen) government bailout soon. Watch this space.

Ira Rennert, Doe Run Peru, Leopards and Spots

Ira Rennert (for it is he)

Seems to me

You don't wanna talk about it
Seems to me
You just turn your pretty head and walk away
The James Gang, 'Walk Away', 1970

We won't really know until the whole story unravels, but right now I'd bet a tenspot that Ira Rennert (above), the owner of Renco which is in turn owner of Doe Run Peru (DRP), has sucked all the money out of his wholly owned Peru operation and left it with no working capital. From here he knows that he can palm off the heavily indebted company to the Peruvian government as the complex is a vital hub in mining activity and the country can't afford to see it close down.

There's little doubt that even though DRP is a private company and under no obligation to disclose its operational results, it has been very profitable over the last four years. For example, Mineweb reports that in 2007 DRP's sales of $1.45Bn outstripped payments to suppliers ($1Bn) very easily. So at first light it seems strange that all of a sudden there's no money left in the coffers after just six months of low spot metals prices and slack demand. It's not just this corner of cyberspace that find this strange, either. Luis Castillo, Sec Gen of Peru's Mining Federation today said that it was suspicious that "the company doesn’t have any working capital despite making money over the past four years.”

But then if you look back at Ira Rennert's past business history, you see that he has a clear pattern that could even be called a modus operandi. This BusinessWeek article dated 2003 is particularly enlightening and here's an extract (the whole article is fully recommended):

• Two of his companies--a Kentucky coal company and a Utah magnesium producer--have filed for Chapter 11 bankruptcy protection in the past two years. Two others, a steelmaker and a lead producer, both reported big losses in their most recent filings. "Rennert has a track record of dramatically leveraging up companies with debt," says Thomas A. Watters, an analyst at Standard & Poor's. "They're really financially distressed."

• The $1.5 billion in bonds his companies issued from 1992 to 1998 have now lost about $700 million, or almost half their value, according to a rough tally by BusinessWeek of his companies' 10 bond issues. For example, the steel outfit's bonds are trading for as little as 26 cents on the dollar, while the lead company bonds have fallen to around 20 cents. A Rennert spokesman disputes the figure, calling the calculation "overly simplistic and misleading," but didn't offer another one

• Some bondholders are gunning for Rennert. He became one of Corporate America's highest-paid chief executives in the '90s by taking a total of about $500 million in dividends and management fees from his companies, according to a 2001 report from Barclays Capital Inc. and Securities & Exchange Commission filings. Now the bondholders are trying to get some of that back: On Jan. 16, AIG Global Investment Corp., Carlyle High Yield Partners, and hedge fund Citadel Equity Fund asked a Manhattan bankruptcy court to appoint a trustee to decide whether the transfer of dividends, management fees, and other funds from Magnesium Corp. of America to Rennert was legal. "We believe the transfers made it impossible for the company to pay its reasonably anticipated debts and may have rendered it insolvent," according to their lawyer, Gerald K. Smith, of Phoenix-based Lewis & Roca LLP.

• Despite the carnage, Rennert has done very well for himself. He owns a plush duplex apartment furnished with antiques and Impressionist paintings on Manhattan's Park Avenue near his Rockefeller Center headquarters. He has a palatial home in Israel and a Gulfstream 5 jet. And he's building a mansion, allegedly complete with bowling alleys and a huge garage, on 64.8 acres in tony Southampton, N.Y., for an estimated $100 million. Still incomplete after five years, the 100,000-square-foot complex angered neighbors and inspired James Brady's novel, The House that Ate the Hamptons.

• This isn't the first time that Rennert's companies have run low on cash. BusinessWeek has learned that in 1962, when Rennert was a young securities broker running his own firm, I.L. Rennert & Co., in a Beaver Street office in Lower Manhattan, he was censured by the NASD for operating without enough capital. The NASD treats violations of federal rules requiring brokerages to be capitalized adequately as one of the most serious securities offenses because a lack of capital could leave clients in the lurch if a firm were to run out of money. Then, in 1963, the NASD caught Rennert with insufficient capital again, but it didn't give him another chance: It revoked his license on Nov. 29, 1964, according to securities regulators' documents, in effect banning him from the securities industry.

• Today, nearly 40 years since he was ousted from the industry, Rennert denies he was punished by the NASD at all. Through a spokesman, he says he shut his firm voluntarily and the NASD revoked his license as a routine administrative matter because he was no longer in business. "Due to market conditions, the firm found itself in violation of the net-capital rule," says spokesman Jon Goldberg. Rennert "raised capital and put it into the firm to bring it into compliance. Again the firm fell below the net-capital requirements, and he voluntarily shut the firm down." But former NASD lawyer Bill T. Singer, a partner at New York-based law firm Gusrae, Kaplan & Bruno PLLC, points out that "you don't revoke your license, you surrender it; there is no voluntary revocation." NASD rules specify that anyone whose license is revoked is not allowed to associate with any NASD firm "in any capacity."

Or in other words, this wouldn't be the first time in a long career that Ira takes the money and runs, leaving other unfortunates to pick up his pieces.

According to reports, DRP owes its suppliers around $100m at the present time. This goes a long way to explaining why a deal led by Peru's Banco de Credito to refinance to the tune of $75m fell through last week and the government said that it would step in to bail out the company. However the news of plant closedown today demostrates that the García government hasn't yet stepped up to the plate. It also suggests that Ira Rennert via his Renco controlling company is willing to let DRP close rather than inject new capital. Thus comes the classic investor's question....

"Where has all the money gone?"

......as only a company used as a cash cow by its controlling company in the year-over-year good times and deliberately vacuumed clean of hard cash and left to wither and die in just months when the markets turned against its sector could run out of money so quickly. No?

Part of the answer may be the reported $200m that Ira Rennert had invested with a certain Bernie Madoff (a guy with a profile these days). But then again, with Rennert's individual net worth at U$6Bn acording to Forbes (update, Forbes March '09 has him at 'just' $4bn), his $185m mansion in The Hamptons and his past history of covering his tush first and watching others carry the can, it's unlikely that the guy is heading for his own personal chapter 11. More likely is that Peru will be forced to pick up the pieces and keep DRP in business, as the country has far more to lose by creating a production bottleneck than anyone else. And Ira knows it.

Update: Know more about Doe Run Peru from enviro-campaigners point of view at this 10 minute youtube. Features a couple of good interviews.

Anyone for a base metals supply squeeze?

More on Doe Run. There are a lot of unconfirmed and unconfirmable rumours going around about Doe Run, so let's just start at the beginning with two basic facts.

• Doe Run Peru (DRP) is currently shut for all operations except its copper smelter supplied by its own 'Cobriza' mine

• DRP is the hub for dozens of small and medium sized Peruvian mining companies. With DRP shut down, a potential supply bottleneck is already forming, especially for lead. DRP processes around 120,000MT of Pb per annum which is around 3% of world supply, as well as zinc, silver, etc.

Now the rumoury stuff that needs serious DD on your own part. UNCONFIRMABLE word is that DRP's owner, Ira Rennert, cannot get the extended credit lines needed to keep DRP running because he's up to his eyes in toxic paper and the banks that normally service both him and his debt lines are turning their backs. The parent company of DRP is junk bond traders Renco, which also controls the separate Doe Run company of the USA. If Doe Run USA gets closed down by the credit crunch, around 11.5% of world Pb (as well as the other base metals smelted by Doe Run) is taken off the market. Not only is that a large chunk of world Pb, it's a very large chunk of Pb not smelted inside China's borders. Then there's US Magnesium, the world's third largest Mg producer. That's a Renco company.

This could become an almighty cluster----. Peru's unions have already said that DRP should not be bailed out by Peru's government, but that would only mean standstill in many of the mines that supply DRP, not to mention the export activity, revenues etc that come from the smelter output. If Peru does bail out DRP, how much money would have to be flushed down a toxic black hole to keep the mining sector operational? Away from the possible knock-on effects, the US mining industry could be under the same kosh if the parent company is the source of the financial problems and it is not some isolated Peruvian problem at DRP. Then there's the spot market...is this the reason we've seen a 20% rise in Pb spot these last few days (likely, as LME ringtraders are much sharper than I)? Or just maybe this still a black swan and it hasn't been factored in yet.

The above is just speculation so far, folks, so DYODD. To emphasize the point, those two links provided are to Wikipedia pages, and nobody in their right minds makes a definitive decision based on a wiki. But it's certainly a story worth following.

UPDATE: Reuters has more information on an updated report. Check it out.

UPDATE 2: Bloomie is running its own report now, with useful quotes from Peru union people.