Summary
Southern Copper Corporation (SCCO) filed an 8-K on July 9, 2013, to address a misunderstanding regarding its Ilo smelter operations in Peru. The company issued a notice to its workers on July 3, 2013, concerning new Peruvian air quality standards for sulfur dioxide (SO2) set to take effect on January 1, 2014. These standards drastically lower the acceptable SO2 levels in Peruvian cities to 20 ug/m3, a significant reduction from the previous 80 ug/m3 and considerably stricter than international benchmarks.
Key Highlights
- 1SCCO is informing investors about new, stringent Peruvian air quality standards for SO2 (20 ug/m3) effective January 1, 2014, which are significantly stricter than international norms.
- 2The company clarified that it has no plans to cease operations at its Ilo smelter, correcting an inaccurate media report.
- 3SCCO warned that strict enforcement of the new SO2 standards could negatively impact the Peruvian industry, potentially leading to the closure of the Ilo smelter and refinery.
- 4Such a closure would jeopardize the employment of at least 1,500 workers and affect third-party service providers.
- 5The Ilo smelter was modernized in 2007 at a cost of $570 million, increasing SO2 recapture from 35% to 92% (currently 95%), and SCCO asserts compliance with current Peruvian environmental commitments.
- 6SCCO believes that current available technology is insufficient to meet the proposed 20 ug/m3 standard consistently, especially given prevailing weather conditions in Ilo.
- 7The company is engaging in discussions with workers, unions, suppliers, industry representatives, and Peruvian authorities to find a balanced approach between environmental protection and industrial development.