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[Page 163]

IN THE MATTER OF AN ARBITRATION BEFORE A TRIBUNAL
CONSTITUTED IN ACCORDANCE WITH THE TRADE PROMOTION
AGREEMENT BETWEEN THE REPUBLIC OF PERÚ AND THE UNITED
STATES OF AMERICA AND THE UNCITRAL RBITRATION RULES 2013

PCA Case No. 2019-46

- AND -

IN THE MATTER OF AN ARBITRATION BEFORE A TRIBUNAL
CONSTITUTED IN ACCORDANCE WITH THE CONTRACT OF STOCK
TRANSFER BETWEEN EMPRESA MINERA DEL CENTRO DEL PERU S.A.
AND DOE RUN PERU S.R. LTDA, DOE RUN RESOURCES, AND RENCO,
DATED 23 OCTOBER 1997, AND THE GUARANTY AGREEMENT BETWEEN
PERU AND DOE RUN PERU S.R. LTDA, DATED 21 NOVEMBER 1997 AND
THE UNCITRAL ARBITRATION RULES 2013

PCA Case No. 2019-47

[Page 164]

(Continued)

HEARING ON JURISDICTION AND LIABILITY

Wednesday, March 6, 2024

The World Bank Group
1225 Connecticut Avenue, N.W.
C Building
Conference Room C1 450
Washington, D.C. 20036

The hearing in the above-entitled matter came on

at 9:30 a.m. before:

JUDGE BRUNO SIMMA, President of the Tribunal

DR. HORACIO GRIGERA NAÓN, Co Arbitrator

MR. J. CHRISTOPHER THOMAS KC, Co Arbitrator

[Page 165]

ALSO PRESENT:

Registry, Permanent Court of Arbitration:

MR. MARTIN DOE RODRIGUEZ
Deputy Secretary General and Principal Legal
Counsel

MR. JAVIER COMPARINI CUETTO
Assistant Legal Counsel

MS. MAGDALENA LEGRIS
Case Manager (remotely)

Assistant to the Tribunal:

DR. HEINER KAHLERT

Realtime Stenographers:

MS. DAWN K. LARSON
Registered Diplomate Reporter (RDR)
Certified Realtime Reporter (CRR)
Worldwide Reporting, LLP
529 14th Street, S.E.
Washington, D.C. 20003
United States of America

MS. MARÍA ELENA DA SILVA
MS. MARTA RINALDI
D.R. Esteno
Colombres 566
Buenos Aires 1218ABE
Argentina
(5411) 4957 0083
[email protected]

Interpreters:

MR. DANIEL GIGLIO

MS. SILVIA COLLA

[Page 166]

APPEARANCES:

On behalf of the Claimant:

MR. ADAM SCHIFFER
MS. JENNIFER CORDELL
MR. MURRAY FOGLER
MR. BUFORD NEELY
Schiffer Hicks Johnson PLLC
700 Louisiana Street
Houston, Texas 77002
United States of America

MS. SARAH WARBURG KOECHLIN
King & Spalding
Dallas, Texas
United States of America

Claimants' Representatives:

MR. JOSH WEISS
MR. ARI RENNERT
MS. CRYSTAL SALING

[Page 167]

APPEARANCES: (Continued)

On behalf of the Respondent:

MR. DANTE AGUILAR ONOFRE
MR. ENRIQUE JESÚS CABRERA GÓMEZ
MR. OSCAR LECAROS JIMENEZ
MR. ANTONIO MONTENEGRO CRIADO
MS. VANESSA DEL CARMEN RIVAS PLATA SALDARRIAGA
Republic of Perú

MS. GAELA K. GEHRING FLORES
MR. PATRICK W. PEARSALL

MR. BRIAN A. VACA
MS. AGUSTINA ÁLVAREZ OLAIZOLA
MR. KELBY BALLENA
MS. INÉS HERNÁNDEZ SAMPELAYO
MS. TATIANA OLAZÁBAL RUIZ DE VELASCO
MR. MICHAEL RODRÍGUEZ MARTÍNEZ
Allen & Overy
1101 New York Avenue NW
Washington D.C. 2005
United States of America

MR. RICHARD ALLEMANT
MS. VANESSA LAMAC
MS. ROMINA GARIBALDI DEL RISCO
Lazo Abogados
Av. Pardo y Aliaga 699
San Isidro 15073
Perú

[Page 168]

APPEARANCES: (Continued)

Nondisputing Party:

MS. LISA J. GROSH
MR. JOHN D. DALEY
Assistant Legal Advisers
Office of International Claims and
Investment Disputes
Office of the Legal Adviser
U.S. Department of State
Suite 203, South Building
2430 E Street, N.W.
Washington, D.C. 20037 2800
United States of America

MR. DAVID M. BIGGE
Chief of Investment Arbitration
Office of International Claims and
Investment Disputes
Office of the Legal Adviser
U.S. Department of State
Suite 203, South Building
2430 E Street, N.W.
Washington, D.C. 20037 2800
United States of America

MR. DAVID STUTE
Attorney Adviser
Office of International Claims and
Investment Disputes
Office of the Legal Adviser
U.S. Department of State
Suite 203, South Building
2430 E Street, N.W.
Washington, D.C. 20037 2800
United States of America

[Page 169]

C O N T E N T S

PAGE

PRELIMINARY MATTERS..................................................170

WITNESSES:

BRUCE NEIL

Direct examination by Mr. Schiffer.......................171

Cross examination by Ms. Gehring Flores..................174

Redirect examination by Mr. Schiffer.....................219

Recross exam by Ms. Gehring Flores.......................227

Questions from the Tribunal..............................228

KENNETH BUCKLEY

Direct examination by Mr. Schiffer.......................237

Cross examination by Mr. Vaca............................246

Continued cross exam. by Ms. Gehring Flores..............271

JUAN FELIPE GUILLERMO ISASI CAYO

Direct examination by Ms. Ávarez Olaizola..............303

Cross examination by Mr. Schiffer........................306

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P R O C E E D I N G S

PRESIDENT SIMMA: This is the second day what I'm going to call the Renco Hearing, and we start examining Witnesses and Experts, and the first Witness on my list is Mr. Bruce Neil. And the first Witness is going to be Mr. Bruce Neil, and I guess that he will be -- he will appear...

MR. SCHIFFER: Mr. Neil will appear by video.

PRESIDENT SIMMA: Ah, by video. Okay.

MR. SCHIFFER: Right.

PRESIDENT SIMMA: And you will have the Declaration on the screen; right?

SECRETARY DOE: Yes. I think we can admit Mr. Bruce Neil from the waiting room. I assume he's waiting in the waiting room now.

(Discussion off the record.)

PRESIDENT SIMMA: Okay. I see Mr. Bruce Neil on the screen.

BRUCE NEIL, CLAIMANTS' WITNESS, CALLED

PRESIDENT SIMMA: Good morning, sir.

THE WITNESS: Good morning.

PRESIDENT SIMMA: I don't think I have to explain what this is going to be about. So you are supposed to declare an oath, and we will put the text of this either electronically or physically in front of you.

[Page 171]

SECRETARY DOE: It should be up on the screen now for Mr. Neil to read.

(Overlapping speakers.)

THE WITNESS: It's in front of me.

PRESIDENT SIMMA: Mr. Neal, can you read this out, please?

THE WITNESS: I solemnly -- it has disappeared, sir.

(Interruption.)

THE WITNESS: I solemnly declare, upon my honor and conscience, that I will speak the truth, the whole truth, and nothing but the truth.

There is no unauthorized person present in this room with me, and I cannot communicate with anyone else during my testimony.

PRESIDENT SIMMA: Thank you very much.

So I give the floor to Mr. Schiffer for the direct. Mr. Schiffer, you have the floor.

MR. SCHIFFER: Thank you.

DIRECT EXAMINATION

BY MR. SCHIFFER:

Q. Can you hear me and see me okay, Mr. Neil?

A. Yes. Good morning.

Q. Good morning.

We only have a little bit of time; so you've

[Page 172]

already introduced yourself.

How old of a man are you, sir?

A. I'm 77 years old.

Q. And roughly how long have you been retired?

A. So I'm -- 78 years old, born in 1945.

Q. Okay.

A. I retired in 2012, 12 years.

Q. From what company?

A. From Doe Run Resources.

Q. Okay. So we're going to talk about your time when you were the President or General Manager of Doe Run Perú from 2003 to 2006. Okay?

A. Yes.

Q. What would you say were your -- I'm going to pick a number -- three accomplishments while you were the President that you're most proud of?

A. I'm most proud of the Projects that the technical people and Project Engineers were able to accomplish in improving the environment, and for the -- the operations.

I am proud of the accomplishment of having an extension granted for the work of the PAMA, and I'm proud of all of the work that was done by, again, the employees of Doe Run Perú, and meeting the challenges and taking care of young people and the work that was done to help with the health situation in the City of La Oroya.

[Page 173]

Q. And, as President, what were your goals at the time? In other words, in running the business, what were your goals?

A. My goals at the time were to complete the PAMA as required by the PAMA law, and to make the necessary improvements that we determined were essential for better ventilation, less emissions from the smelter, which were certainly a problem for the public health.

Q. At any time, did Renco or DRRC hinder or prevent you from trying to accomplish your goals?

A. No.

MR. SCHIFFER: We'll pass the Witness at this time.

(Comments off microphone.)

MR. SCHIFFER: We're passing. We're finished.

PRESIDENT SIMMA: Thank you, Mr. Schiffer.

So your examination is probably going to be done by Mr. Pearsall; so you have the floor.

MR. PEARSALL: It's actually going to be done by my colleague, Ms. Gehring Flores.

PRESIDENT SIMMA: Okay. Yes.

MR. PEARSALL: Thank you, Mr. President.

PRESIDENT SIMMA: Your colleague is Mr.?

MR. PEARSALL: Ms. Gehring Flores.

PRESIDENT SIMMA: Oh, sorry, I looked at the

[Page 174]

person next.

(Overlapping speakers.)

MS. GEHRING FLORES: I moved.

PRESIDENT SIMMA: Okay. You have the floor.

MS. GEHRING FLORES: Thank you, Mr. President.

CROSS-EXAMINATION

BY MS. GEHRING FLORES:

Q. Mr. Neil, good morning.

A. Good morning.

PRESIDENT SIMMA: Could you -- sorry. Do me a favor, probably also to Mr. Neil, and get the mike a bit more in front of you.

MS. GEHRING FLORES: Oh, sure.

BY MS. GEHRING FLORES:

Q. Good morning Mr. Neil.

A. Good morning.

Q. I am Gaela Gehring Flores, and I'm one of the attorneys representing Perú and Activos Mineros in these arbitration proceedings. I'm going to ask you some questions that relate to the Witness Statement that you submitted in this Arbitration proceeding, and if at any time you need some clarification, or if at any time you need a break, just let me know.

A. Okay.

Q. And you've, I believe, already been told that

[Page 175]

there is a simultaneous interpretation going on; is that right?

A. Yes. I was earlier asked to pause before -- between you asking the question and my responding.

Q. That's right. And we've got absolutely excellent Interpreters here, but they are human. So it would be very nice to them to make sure that we don't overlap and that we both speak very clearly. So thank you.

Mr. Neil, I understand that you got your degree in metallurgical engineering in 1967; is that correct?

A. Yes, that is correct.

Q. And you worked as a metallurgical engineer at a number of smelting and refining facilities for your entire 45-year career; is that right?

A. Yes, that is true.

Q. Starting in the '60s, I think in 1969, you started working at Noranda in Canada? Is -- am I pronouncing that correct? It is Noranda?

A. The pronunciation was Noranda.

Q. Okay. Noranda. Is that where you first started working, Mr. Neil?

A. Yes.

Q. And you became the plant manager at Noranda?

A. No. I was a technical assistant, which was an

[Page 176]

engineering position, a first engineering position.

Q. You were at Noranda for quite some time; right? You were there until 1992?

A. The -- Noranda had several smelters. I worked at the Rouyn-Noranda Horne Smelter, I transferred to Brunswick Mining and Smelting, which was a lead smelter and lead refinery, and at that plant I became the plant manager.

Q. Okay. Understood. Thank you.

Did any of the Noranda facilities where you worked have a copper circuit?

A. The Horne Smelter had a copper refinery -- sorry, a copper smelter, not a refinery.

Q. And am I correct in understanding that Noranda would have utilized a Noranda furnace in its copper circuit?

A. Not at that time.

Q. When would they have started implementing a Noranda furnace?

A. Perhaps six or seven years after I left.

Q. But you're familiar with the Noranda furnace technology, I imagine?

A. I worked on a -- it was called a pilot, a pilot plant, an initial plant, proving the process. I have not -- I've not seen or worked at a plant that had one, that had the one that was initially installed around 1980,

[Page 177]

1979.

Q. Is it fair to say that the Noranda furnace is similar in technology to a CMT furnace?

A. When you -- did you say CMT?

Q. Yes, I did, Mr. Neil.

A. I'm not aware.

Q. And -- but at the La Oroya smelting facility, you think -- I believe, in your Witness Statement in Paragraph 16 talk about sending a team to Chile. And during your team's visit to Chile, were they checking out a CMT furnace?

A. They were checking out a -- my understanding, they were checking out a furnace that was a reverberatory furnace that smelted copper concentrates or roasting feed, and produced a liquid called matte, and they had a -- they employed the same type of burners, oxygen-enriched burners, that the La Oroya reverb employed.

Q. Thank you for that clarification.

When the team went to Chile, is it your understanding that they found out that a CMT furnace was defective in any way?

A. They went -- you're asking me if the furnace was defective. I'm not sure if I understand the question. I've misinterpreted the question?

Q. No, no, not at all. I just think maybe there

[Page 178]

might be a misunderstanding because Counsel for Renco and DRRC yesterday mentioned that when your team went to Chile, they found out that the CMT furnace wouldn't work. There was something wrong with it.

A. Okay. My understanding, they went to -- the group of technical people went to Chile to visit this operation with the intention of understanding how that furnace, that they had worked with an acid plant that was -- and had been installed on that furnace to produce SO2.

And what they returned to La Oroya with was the belief that the acid plant attached to that furnace would not allow La Oroya to meet -- if we install a similar operation on our reverb furnace, we would not be able to meet the -- what's called the LMPs, "limite," limits of the environment. That was part of the PAMA requirements, PAMA goals, and that it would -- if we did that, we would not be able to achieve -- there would be too much SO2 escaping; so it would not work for us. And, therefore, we were unable to go ahead with the original plan.

Q. When you say "original plan," Mr. Neil, do you mean DRP's plan to constructed only one Sulfuric Acid Plant; is that correct?

A. Yes. Sorry. That is correct.

(Overlapping speakers.)

[Page 179]

Q. Okay. As opposed to the three Sulfuric Acid Plants that the PAMA first suggested; is that right?

A. My understanding of the PAMA, as proposed by Centromín, was that there would be two acid plants required, and that the Doe Run initial view of this after their initial view was that it could be done with one; and as a result of the visit to Chile, the team believed that one or two, neither plant would work, and there had to be three acid plants, one for each of the circuits.

Q. And that conclusion wasn't because there was some sort of inherent defect in the CMT furnace technology; right? Maybe -- let me restate the question.

A. I'm still not understanding the CMT technology because -- I'm not sure why, but I don't understand that furnace that you're referring to was called "CMT."

Q. Yeah. I think it might just be a misunderstanding with Counsel. But it --

MR. SCHIFFER: Can -- I'm sorry, can I help.

Because he knows it as the El Teniente.

MS. GEHRING FLORES: El Teniente.

(Overlapping speakers.)

MR. SCHIFFER: Yes, that's how he knows it.

BY MS. GEHRING FLORES:

Q. Yes, the El Teniente. The El Teniente furnace--

A. Yes.

[Page 180]

Q. -- it's my understanding that that -- that is a CMT-style furnace, but maybe you just refer to it as El Teniente, which is another brand like Noranda, CMT, El Teniente. It's my understanding that Noranda, CMT, and El Teniente all have similar technology; is that correct?

A. I could not answer that question. I'm sorry.

Q. Okay. But in any event, as your Witness Statement says, after the team went to Chile, they came back and told you that one Sulfuric Acid Plant isn't going to be enough; correct?

A. They said that the recovery of SO2, of sulfur as SO2 from that furnace, would not allow us to meet the -- when we combined that with other operations, we would not be able to meet the requirements for the limits, which were -- was for one of the requirements of the PAMA.

Q. If you stuck with just one Sulfuric Acid Plant; right?

A. Yes.

Q. In the late 1990s, you started working for the lead smelting facility in Glover, Missouri; is that correct?

A. Yes.

Q. And Doe Run would acquire that facility in 1998?

A. That is correct.

Q. And given your experience, Mr. Neil, I imagine

[Page 181]

you have an intimate understanding of smelting operations; is that right?

A. I had a good understanding of the operations of the lead smelting, yes.

Q. Of lead smelting? Is that what you said?

A. Yes.

Q. Okay. Up to that point in your career when you were now at the Doe Run, Glover, Missouri, facility, had you had any experience with copper smelting?

A. My experience with the copper smelting was between 1969 and 1972.

Q. Going back to your many years of experience, being a metallurgical engineer, would you say that from the moment -- you could explain the smelting process, from the moment the concentrate is fed into the plant to the moment the desired metal output is achieved?

A. Yes.

Q. And you're also familiar with the different types of emissions at smelting facilities; correct?

A. Yes.

Q. Is it fair to say that emissions can be divided into two main categories: The first being main stack, or stack emissions, and the second being fugitive emissions?

A. There are emissions that are captured in ventilation systems, and the emissions that are not

[Page 182]

captured in the ventilation systems can escape, and generally are called -- are what you said.

Q. Meaning fugitive emissions?

A. Yes. They're fugitive that they were not captured by the ventilation systems.

Q. Okay. Is it okay if I refer to the emissions that are captured by ventilation systems as "main-stack emissions"? Or would you prefer that I say "filtered emissions"?

A. No, there generally are several ventilation-capturing devices and, therefore, perhaps, more than one stack or perhaps one stack.

Q. Okay. So would it be -- so I'll call them "ventilation emissions"?

A. Stack emissions is fine.

Q. Stack emissions. Okay. And "stack emissions" assumes emissions that are captured and sent first through a filter and then leave the Plant through a stack; is that correct?

A. Yes, it is. It is correct.

Q. Okay. And at the La Oroya Plant, the filter that the gases or that the emissions would flow through was called the "Cottrell filter"?

A. Yes.

Q. So going back to your experience at the Glover

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Smelter in Missouri, that Smelter is one of 10 Doe Run smelting -- or was one of 10 Doe Run smelting facilities in Missouri; is that correct?

A. Doe Run had a smelter in -- a lead smelter in Herculaneum and a lead smelter in Glover. Both of these were primary smelters, and a secondary lead smelter mainly treating, processing batteries and other lead secondaries. Three; three products, three smelters.

Q. Did your work at the Grover Smelter, Mr. Neil, involve working with the Herculaneum Smelter?

A. No.

Q. But I understand that the Herculaneum Smelter had a Sulfuric Acid Plant; correct?

A. Yes.

Q. But the Glover Facility did not?

A. That is correct.

Q. The Noranda Facility that you worked at, that had a Sulfuric Acid Plant; correct?

A. When I worked at the Noranda Plant, there was no Sulfuric Acid Plant. That was built years after I left.

Q. When was the first time you, in your career, started -- were working at a smelting facility with a Sulfuric Acid Plant?

A. That was in 1972, when I went to the Brunswick Mining and Smelting Operation.

[Page 184]

Q. So you're familiar with the technology involved in Sulfuric Acid Plants; is that correct?

A. I have a familiarity, yes, that is correct.

Q. And you're familiar with the purpose of a Sulfuric Acid Plant; is that right, Mr. Neil?

A. Yes.

Q. Because, I think for most people, the idea that you would want to create a Sulfuric Acid Plant is a little odd. And I only learned on this case that the purpose of a Sulfuric Acid Plant is to ultimately capture sulfur dioxide emissions so that they don't go out into the atmosphere or into the air, so you capture those sulfur dioxide emissions and you then clean or scrub those gases, the sulfur dioxide gas, of its particulate matter, and then convert it into sulfuric acid. Is my understanding correct? It might be very simple.

A. That's my understanding as well.

Q. Okay. Good. It's taken awhile for me to learn this.

And sulfur dioxide emissions, especially when involving a copper-smelting process, can have particulate matter -- is that correct? -- in them.

They're traveling with the sulfur dioxide; is that right?

A. Yes.

[Page 185]

Q. Okay.

A. Unless -- you're talking about before the acid plant; correct?

Q. Right, before the acid plant and before the scrubbers because, from what I understand, the scrubbers scrub out the great majority of the particulate matter; is that right?

A. That is correct.

Q. Okay. And that particulate matter can contain lead?

A. Yes, that is correct.

Q. Okay. So one of the purposes of a Sulfuric Acid Plant is to capture sulfur dioxide emissions that would just otherwise go out into the open air and also capture or filter or scrub away lead that might be in the particulate matter in the sulfur dioxide; is that correct?

A. Yes, that is correct.

Q. Okay. And when I say "capture SO2 or sulfur dioxide emissions," that essentially means capturing fugitive emissions; correct?

A. No. By my definition, it does not do that. It captures the emissions which are captured by the ventilation system; whereas, the fugitives are the ones which evade, if you like, or are not able to be captured by the ventilation system.

[Page 186]

Q. So are you telling me, Mr. Neil, that a Sulfuric Acid Plant would only be designed to capture the sulfur dioxide that would have gone through a stack -- that would have gone through a filter in a stack?

A. The acid plant will capture -- will process the gases that have gone through the ductwork, and the acid plant will capture the particulates that are in those gases and will convert the SO2 -- scrub, convert -- the sulfur in the SO2 that's contained in those gases.

Q. It's your understanding, Mr. Neil, that, at the La Oroya, DRP's La Oroya Facility, on the copper circuit, the copper circuit has converter furnaces; correct? There are a number of different types of furnaces. From I understand, it -- roasters, then there's -- is it the reverb furnace that's next, Mr. Neil?

A. Yes.

Q. Roasters, reverb, then the converter furnace; is that correct?

A. Yes, that is correct.

Q. And there are -- at the La Oroya Facility, there were six converters; correct?

A. I believe there were. There were several converters. Yes. Converter furnaces.

Q. Okay. And from what I understand, there's a blowing process and a casting process with converters; is

[Page 187]

that right?

A. The converter furnaces are rotary furnaces. They can be rotated, turned, and allow air to blow into them and that converts the matte product from the reverb -- the matte product into a copper product, and then the copper product is treated in a similar furnace to remove the last of the oxygen, and then there's a casting process from that last furnace.

Q. And during this casting process -- and I'm focused on the converters. During the casting process -- you said that they are rotary furnaces -- those furnaces emit smoke out into the air; is that right?

A. They emit smoke that -- smoke, gases, that go through a hood, hooding process, the hood, and then into ductwork which is then gone to the Cottrell unit, electrostatic Cottrell unit, which captures dust particulates, and then that gas, after the dust has been captured, goes to the stack.

Q. Mr. Neil, I'm going to put on the screen Mr. Wim Dobbelaere's First Expert Report. At Paragraph 292, there's a photo there. We'll get there.

Can you see that on your screen, Mr. Neil?

A. Yes.

Q. So I think you were telling me that -- or it

[Page 188]

sounds like you're telling me that all of the gases from the converters were captured and directed to filters and then left the Facility out the main stack; is that correct?

A. The hood that covers the converter, because it rotates -- it's a converter, rotating converter -- the hood that sits on that, there is a gap, a small gap around the -- between the hood and the machine, and so definitely there are some gases which evade the suction in the hood. And when the converter rotates out and the gases are stopped blowing in, then there is some -- there is fumes from the hot liquid that evade the ventilation. And what we're seeing is this is the top of the -- I believe this is the top of the copper converter aisle, and at this time there's -- you can see the dust and the fumes escaping from the building.

Q. And like we mentioned before, there are a number of converters in this area in the copper circuit; correct, Mr. Neil?

A. Yes. Yes.

Q. So at almost any given point in time, at least one converter could be in -- could be rotating at a point and smoke is escaping; correct?

A. Normally, there would be one or more converters in position, and there could be -- there could be some gases escaping. Absolutely.

[Page 189]

Q. Okay. And correct me if I'm wrong, but the Sulfuric Acid Plant Project at La Oroya was meant to capture these gases as well as the gases that were being directed to the main stack; is that right?

A. The PAMA was meant to capture the gases that had the bulk of the SO2. Okay. And those gases are from each of the furnaces in the system, which is the roasters, the reverb, and the converters. The majority of the sulfur is in the roasters and in the reverb.

Q. So it's your testimony, Mr. Neil, that DRP was planning to allow these emissions, which I do believe are fugitive emissions. Am I right there? Are those fugitive emissions?

A. I would call those "fugitive emissions," yes.

Q. Okay. So is it your testimony, Mr. Neil, that DRP was not planning on a sulfuric acid and modernization design to minimize and capture these fugitive emissions?

A. The PAMA Project was designed to capture SO2, and it was designed to limit the SO2 emissions to a certain maximum point. It was also designed to capture the gases -- to capture the emissions that were contained in those gases and SO2. The purpose of the Acid Plant was to improve the recovery of SO2 by a large amount and also to improve the recovery of emissions which initially we would -- before the Acid Plant, would have gone through the

[Page 190]

Cottrell, and after the Acid Plant would go through the Acid Plant where the emissions would be captured. So there would be a large improvement. But the Acid Plant was there to capture the bulk of the SO2, which was from the roasters and the reverbs.

Q. And so you're saying that this smoke or these fugitive emissions from the converters wouldn't have any SO2?

A. I wouldn't be able to say that, no. There would be some SO2.

Q. Okay. So those fugitive emissions have SO2; correct?

(Overlapping speakers.)

Q. Excuse me. Go ahead.

A. Those emissions would have some SO2, yes.

Q. They would also have particulate matter in the form of lead as well; correct?

A. There would be some lead, yes, from those emissions.

Q. And you might know that because the smoke is a little bit black or gray; correct?

A. I would know that because that appears to be high-temperature gases containing SO2, some SO2, yes.

Q. I'd like to turn you to the PAMA.

You're familiar with the PAMA; correct, Mr. Neil?

[Page 191]

A. Yes.

Q. And I imagine, before you became General Manager and eventually President of Doe Run Perú, you studied the PAMA.

A. Yes.

Q. Let's go to PDF Page 165 of 299.

So can you see that on your screen, Mr. Neil?

A. It needs to be expanded for me to see clearly.

Q. I can say that this is showing the part of the PAMA which is entitled "5.4.1 Project Number 1, New Sulfuric Acid Plants."

Can you see that, Mr. Neil?

A. Yes.

Q. Now, I want to turn to Page 169, PDF Page 169, which is in this part of the PAMA.

You can see there this section that's entitled "modernization with new technologies." Underneath that, it says: "The Project" -- and I'll represent that it's talking about the Sulfuric Acid Plant Project -- "requires the previous modernization of three circuits as detailed as follows."

Mr. Neil, is it your understanding that, before Doe Run Perú could commence work on the Sulfuric Acid Project, it needed to previously modernize the smelting circuits?

[Page 192]

A. This -- the document that we're looking at?

Q. The PAMA, yes.

A. Can you tell -- can you tell me what this is from again? I'm sorry.

Q. It's the PAMA. This is the --

A. I think --

(Overlapping speakers.)

Q. This is the Sulfuric Acid Plant part of the PAMA.

A. So this is a 1997 document or 1996 document?

Q. Yes. 1997, yes.

Were you familiar with the 1997 PAMA, Mr. Neil, when you started at Doe Run Perú?

A. I was -- I started in March of 2003, and, until I was appointed General Manager in September, I studied the PAMA. I studied the business, the recoveries, the Plant, the manpower technologies. I studied the business.

Q. Right. And you were certainly familiar with the Sulfuric Acid Plant Project of the PAMA; correct?

A. Yes.

Q. And you understood that, in order to start the Sulfuric Acid Plant -- actually, let me go back a second.

Let's just focus on the copper circuit. The copper circuit at DRP's Smelting Facility in Perú had very old equipment, from what I understand; is that correct?

A. That's correct.

[Page 193]

Q. And the PAMA, I believe, here is suggesting that it needed to be modernized.

It needed to be replaced; is that right? Was that your understanding?

A. My understanding was that there were a belief system in Doe Run from 1998, that we could combine the -- we could combine the three circuits, zinc, lead, and copper, into one -- gases to go -- to mix and produce acid.

Q. Yes.

A. And we determined that -- and we determined that that was not possible. We could not collect enough of the -- we could not reconvert enough of the SO2 into sulfuric acid to meet the requirements of the PAMA, and there were what was called PANCAS (phonetic) and LMPS. We could not meet the LMPS. We could not recover a sufficient amount of SO2.

Q. And after that --

A. And after that, in order to do that, we would have to convert the -- we would have to convert the three systems, zinc, copper, and lead, each into its own separate Sulfuric Acid Plants. That meant there would be two new Sulfuric Acid Plants, one for copper and one for lead, which did not have an SO2 recovery. And at the time, the zinc Sulfuric Acid Plant hadn't been running for many years, and it would -- we had to put new -- basically, new

[Page 194]

equipment in that for it to meet the standards.

Q. Okay. Let me take you to PDF Page 152 of the PAMA. If we could turn that, yeah, and expand it a little bit. Okay.

So this is the schedule -- the investment schedule for Project Number 1, the Sulfuric Acid Plant Project. You can see, on the very first line, the very first row is labeled "Sulfuric Acid Plant from" -- I think -- I believe that means "copper circuit," because it says "circ, CU."

"CU" is the periodic table indication for copper; right, Mr. Neil?

A. Yes -- yes.

Q. Okay. And then beneath that, for the next row, is Sulfuric Acid Plant from PB, circuit PB, lead, and circuit ZN, zinc; is that correct?

A. Yes.

Q. Okay. So on the top row, with reference to the copper circuit, you can see that this is the original 1997 PAMA. The original 1997 PAMA suggested that investments start for the copper circuit for the Sulfuric Acid Plant in the Year 2003; is that right?

A. Yes.

Q. And again, another investment in 2004; is that correct?

[Page 195]

A. Yes.

Q. And this is in thousands of U.S. dollars, so in 2003 it was contemplated that DRP would invest 20 million, and in 2004 around 21 million; is that correct?

A. Yeah. My recollection is that the PAMA required the work on the Acid Plant to start in 2003.

Q. Okay.

A. And that's -- that could be what this is.

Q. And that's work on the Sulfuric Acid Plant part, in particular.

Now, let me take you to the very next page, which is PDF --

MR. SCHIFFER: I'm sorry. Was that a question or just a statement?

MS. GEHRING FLORES: I honestly don't remember what I said.

BY MS. GEHRING FLORES:

Q. But let me take you to the very next page, which is, again, the investment schedule. This is the next table for the investment schedule for the Sulfuric Acid Plant Project.

Now, I understand that this is the modernization part that needs to happen. And you just talked about the fact that you had come to the conclusion, after the team came back from Chile, that you needed to construct

[Page 196]

three -- you needed to have three Sulfuric Acid Plants, not just one; correct?

This was in 2003 you that made that decision?

A. Yeah, by the end of 2003, that is correct.

Q. Okay. And looking at the original PAMA from 1997 -- and this is the modernization aspect of it -- there's -- the first row says "copper circuit," the second row says "lead circuit," and the third row says "zinc circuit."

And you can see the investment, or the suggested investment, that is listed there. Starting with the first row, copper circuit, in 1998, that is $776,000; correct?

A. That is correct.

Q. And then in 1999, 37 -- over $37 million; correct?

A. I'm not sure where you are.

Q. In the next --

A. Oh, 19 --

Q. Yeah, 1999.

A. I'm struggling because I don't recognize the table.

Q. I guess -- whether you recognize it or not, Mr. Neil, I'm representing to you that this is the investment schedule in the PAMA. This is the next page in the PAMA.

[Page 197]

Would you agree that, at least, I'm reading it correctly, that that first row says that in 1998 and 1999 and in the year 2000, the suggestion from the PAMA is that DRP would be investing -- would be investing millions, if not hundreds of thousands of dollars in those years for the copper circuit.

Am I reading that correctly?

A. What year is this again? 1998? This was a 1998 document or a 1997 document?

Q. This is the PAMA. This is the 1997 PAMA.

A. My understanding of the PAMA, the information that I have seen is that the PAMA had nine Projects and the total expected expenditure was $108 million --

Q. I guess my question --

A. -- over ten years.

Q. Okay.

A. And I'm looking at something that says -- I'm not sure if you have -- I guess you had the numbers 140 and 149, and that is 270 million.

(Overlapping speakers.)

Q. I'm not asking that question.

MR. SCHIFFER: I just -- is he allowed to finish his answer before the next question?

MS. GEHRING FLORES: I'm just asking that he answer my question.

[Page 198]

BY MS. GEHRING FLORES:

Q. I just asked Mr. Neil -- am I reading the table correctly? Did those -- on the first row for 1998, 1999, and 2000, does this table contemplate that DRP is to start investing in the modernization of the copper circuit in 1998, 1999, and 2000. Is that correct?

A. That's what this chart says.

Q. Okay. If you were to read these two tables together, would it be fair to say that DRP would have to start modernization of the copper circuit well before it started investing in the Sulfuric Acid Plant?

A. Yes. This is 1999. You would spend $37 million on the copper circuit, and that as well for the 2003.

Q. And correct me if I'm wrong, Mr. Neil, but from what I understand, you needed to know what equipment was going to be in the copper circuit before designing and constructing the Sulfuric Acid Plant; is that correct?

A. It is correct that you would design a Sulfuric Acid Plant according to the technology that you were using or going to use to smelt the material, yes.

Q. And I believe Counsel for Renco and DRRC said yesterday you can't just buy copper smelting technology off a shelf, something like that. That is not -- you know, that is not just something that you can go out and buy right away.

[Page 199]

Do you agree with that?

A. I would agree with that.

Q. So you would need -- in order to complete your Sulfuric Acid Plant Project, you would first need to know what copper smelting equipment is being hooked up to that Sulfuric Acid Plant first, and you would need to purchase it; correct?

A. Yes. You would need to decide the technology, smelting technology you are going to use --

Q. So any delay -- excuse me.

A. -- and be able to --

Q. Sorry. I'll let you finish.

A. And then you would be able to design your acid plant for that technology.

Q. So any delay in the modernization part of this Project would cause a delay in the design and construction of the Sulfuric Acid Plant; correct?

A. I'm sorry. Could you repeat the question?

Q. Any delay in starting the modernization phase of the copper circuit would necessarily delay the design and construction of the Sulfuric Acid Plant; correct?

A. The design of the Sulfuric Acid Plant depends on the technology that you use, that's correct. You cannot design -- you cannot design an acid plant until you have decided or designed your smelting technology, yes.

[Page 200]

Q. Mr. Neil, have you ever worked at a smelter that didn't have fugitive emissions?

A. I would like you to repeat that please.

Q. Have you ever worked at a smelter or smelting facility that did not have fugitive emissions?

A. There were always some fugitive emissions.

Q. I think we have talked a bit about what you studied about the La Oroya smelting facility before you went down to Perú as General Manager of that facility; is that correct?

A. I spent five or six months in Perú studying the operation, visiting the operation, yes.

Q. Okay. And you reviewed the 1997 PAMA, I understand?

A. I believe I had read all the documents that pertained to the PAMA.

Q. Okay. Did you read any of the documents that were issued to the bidders for the La Oroya Facility during Perú's tender process?

A. I believe that I did not read any of the documents.

Q. So you were never shown the Knight Piésold Report, for instance?

Are you familiar with that Report, Mr. Neil?

A. Not by the name, no.

[Page 201]

Q. Okay. But you did review the PAMA.

Let's go to Page 1 -- PDF Page 169. I'm going to show you the PAMA again. I'm sure it is your favorite document by now. I might have the wrong page. Oh, excuse me. I guess it is PDF Page 87. All right.

So we've talked a bit about the different sorts of emissions, one of them being fugitive emissions, and here in the PAMA I'm showing you the section that is entitled "fugitive emissions," and underneath it talks about the copper smelter.

It says -- if the translation were a little bit better, I think it would say: "Fugitive emissions from the copper smelter are produced in the preparation plant as materials are taken outside the area of the collection hoods. This usually occurs when the capacity of the extractors are exceeded." And I could keep going on, but...

Did I read that correctly, Mr. Neil?

A. Yes.

Q. I can represent to you that this section goes on for another page.

I understand that in December -- no, sorry, excuse me -- February 2004 you wrote to the MEM requesting an extension of time to complete certain PAMA Projects; is that right?

[Page 202]

A. In February of 2004.

Q. Yeah. And in that Extension Request, you mentioned that the PAMA did not address fugitive emissions; is that right?

A. Yes. Yes, that is correct. And I believe I described some of the fugitive emissions at the time.

Q. Had you not seen this part of the PAMA when you wrote that Extension Request, Mr. Neil?

A. Would you repeat the question please.

Q. Had you not seen this part of the PAMA, the part that is entitled "Fugitive Emissions"?

Had you not seen this part of the PAMA when you wrote your Extension Request in February of 2004?

A. I believe that I read the fugitive -- I'm sorry. I'm getting a feedback. Maybe I'm speaking too close or something.

Q. We can hear you okay.

A. I believe I had all of the -- I'm getting feedback again.

Q. Please proceed.

A. I believe that I had read the PAMA documents.

The -- in 2003, the Gradient people had done a study in the plant and had determined that fugitives were -- particularly with lead was talking about at the time -- but fugitive emissions did not disperse as stack

[Page 203]

emissions did, and, therefore, the effect of the fugitives was -- on a gram-per-gram basis was seven times the effect for health in the community.

And that point caused us to put all of our focus really on minimizing the fugitives, whether they were from lower-level stack emissions, from building emissions, or whether they were from ground-level emissions, blowing of dust or tracking of vehicles, that sort of thing.

Q. Mr. Neil, did the Gradient -- the 2004 Gradient Study, the one that you're referring to that talked about the high level of toxicity of fugitive emissions, did that significantly change your understanding of fugitive emissions, at the time?

A. The seven times the impact number was -- it did significantly change my view. It was an eye-opening number.

Normally, the dust which are collected are more concentrated than the fugitives because that is -- you're gathering all of those and you're putting them into a system, which then you are cleaning gases with an electrostatic precipitator or a baghouse type of collection system, and you recycle all of that material. And then the amount that may pass through the ventilation system is a relatively small number compared to what's collected in the ventilation systems.

[Page 204]

And my belief was that the fugitive numbers were relatively low, and with this seven times effect was an eye-opener. There is no doubt about that in my mind. So we -- we immediately started paving. We immediately started -- there's a list of projects, you've seen them all: Baghouses, sealing of buildings.

Q. And one of the Projects to address fugitive emissions in the PAMA was Project Number 1 -- correct? -- was Project Number 1 or the Sulfuric Acid Project. Correct?

A. When you say "Project Number 1," the acid plant, you mean the PAMA Project -- the Acid Plant Project?

Q. Yes. Correct.

A. Which we had referred to it as Project Number 9 because it was the last one that we completed, but, yes, it was the acid plant for the PAMA.

Q. And that was one of the Projects that was designed to address fugitive emissions; correct?

A. It was designed to -- the acid plant really was designed to minimize the stack emissions, which included particulates and included the -- it included the SO2, of course. And the fugitives that it would collect would be from changes made to the technology of the circuits that you were, you know, you were using to smelt the concentrates.

[Page 205]

Q. After the Gradient Study of 2004 and after you had come to the new understanding that fugitive emissions were particularly toxic, you turned to Projects that would address fugitive emissions.

Is that your testimony?

A. Yes. There were a number of Projects that were done, listed in the February document, February 2004 document, and I believe there were some more that were done afterwards, but, yes.

Q. And replacement of the very old copper circuit furnaces, whether it's the roasters or the reverb furnace -- or the reverb furnace or the converter, that in itself wouldn't help address fugitive emissions, Mr. Neil?

Is that what you're telling me?

A. The copper modernization project that was included in the PAMA extension increased the quality of matte, which reduced the amount of sulfur that would go through to the converters. So that in itself was a major reduction of converting -- converting fugitive emissions that you saw in the photograph that you showed us.

Q. Right. So once DRP would modernize the copper circuit processing equipment, you probably wouldn't see those clouds of smoke coming from -- coming from the converter area of the copper circuit; right?

A. Definitely. There would have been a major

[Page 206]

improvement, yes.

Q. In Paragraph 14 of your Witness Statement, you say that shortly after your arrival at Doe Run Perú, you felt DRP needed to prioritize reducing fugitive emissions. I guess I just wanted to focus on that word "felt."

Was there something significant that happened to give you that feeling Mr. Neil?

A. I don't recall my words.

Q. Okay. Could you pull up Paragraph 14 of Mr. Neil's Witness Statement, please. So "faced with the situation above, DRP felt that it needed to prioritize reducing fugitive emissions (gases and suspended particles) and addressing public health issues related to lead and other heavy metals."

Did I read that correctly, Mr. Neil?

MR. SCHIFFER: May we see the paragraph above?

MS. GEHRING FLORES: Sure. Could you zoom out.

THE WITNESS: Yes, you read that correctly.

BY MS. GEHRING FLORES:

Q. Okay.

A. So I'm referring to the -- am I referring to the gradient?

Q. No. If you want to read the paragraph beforehand, please go ahead.

A. Can you also -- can you go to Paragraph 12.

[Page 207]

Q. Yes.

A. Okay.

Q. So, yeah, I was just trying to -- go ahead.

A. Go ahead.

Q. I was just trying to get an idea of -- if you could go back down to 14 -- why you, all of a sudden, got this feeling that DRP needed to prioritize reducing fugitive emissions?

A. I believe the situation above that I was referring to, the Gradient Study that had put a number, this seven times, and it had laid out a list of areas that they thought of fugitives that needed to be addressed.

And also I believe it was mentioned that, with young children, soils, cleaning, hygiene, but touching soils, touching anything that might have lead on it was a possible exposure, what they referred to as one of the "pathways" or exposure to lead.

And at the time we were washing streets, we were, perhaps, sweeping, but we were definitely washing streets and areas in the city, and that the soil in the city needed to be removed, replaced, and that was -- that part of the cleaning of the whole area was Centromín's responsibility.

That's why we had spoke to Centromín. And all of that we needed to double down on focusing on minimizing the amount of fugitive emissions by whatever means, and so we

[Page 208]

adjusted our priorities to do those things.

Q. And those community projects like sweeping in the streets and washing the streets, hygiene programs, those are all exposure reduction programs; right, Mr. Neil?

Those aren't emissions reduction programs; correct?

A. Yes.

Q. Okay.

A. As are reducing all of the exposures from low-level dust, road dust, dust under a truck, dust from wind blowing, let's say a stockpile of material, fugitive emissions, whether from copper or lead or one of the processes in the lead smelter. We had a number of projects: Ventilation, baghouses, sealing up of some buildings.

Q. So baghouses, yes. I understand baghouses would reduce lead emissions; correct? From just distinguishing from the source of the emission, which is the DRP La Oroya Facility, versus where the emissions are landing in La Oroya. So I'm focus on the source.

So --

A. Internal to -- inside our fence line, yeah, is what I meant. Sorry for over speaking.

Q. No. It's okay.

So the Projects in the communities would not have

[Page 209]

reduced emissions that are coming out of DRP's facility; is that correct?

A. Correct.

Q. Yeah. And you did mention the baghouse project, which would have reduced, among other particulate matter, lead emissions coming from the La Oroya DRP facility; is that correct?

A. Yes. We built some relatively small baghouses to capture dust from individual sources, individual furnaces in different parts of the plant that had not been adequately ventilated, in our view.

Q. Baghouses don't remove sulfur dioxide; right?

A. Correct.

Q. And the baghouses -- the baghouse project was completed in 2006; correct?

A. The baghouses I'm referring to are baghouses that we identified in 2003 as -- and 2004 -- as leading to low-level emissions in the plant and which were, for one reason or another, did not have a ventilation system or a specific ventilation system adequate.

We could see emissions and we -- and lead operations, and one example is the dross plant. And we listed some of these items to the MEM, and they were added to our, you know, list of things that we would do in the meantime. We're talking 2004, '05, perhaps '06.

[Page 210]

Q. Yeah. Maybe completed in -- maybe all of that was completed in December of 2006, perhaps?

A. Yes. Completed by then.

PRESIDENT SIMMA: Excuse me, Ms. Gehring. Would it interrupt the flow, the natural flow, of your examination if you had a coffee break now, or would you say it would be better to have it a few minutes later? Because time has come, and of course this is a -- quite a strenuous exercise, at least for the two of you.

MS. GEHRING FLORES: Yes. A coffee break would be great.

PRESIDENT SIMMA: Is that okay?

MS. GEHRING FLORES: Yes.

PRESIDENT SIMMA: All right. So we have a coffee break until 11:15.

Mr. Neil, you are to be sequestered. Is that the word? So don't speak to -- okay. Why don't you say precisely what Mr. Neil is not supposed to do?

SECRETARY DOE: Sure. Mr. Neil, you are just asked not to speak to anybody about this case there while we take a quick break and resume your examination.

PRESIDENT SIMMA: Okay.

THE WITNESS: That's fine.

PRESIDENT SIMMA: Thank you. Okay.

(Brief recess.)

[Page 211]

PRESIDENT SIMMA: Let us continue the exam, and Ms. Gehring Flores, you have the floor again. If you're ready.

MS. GEHRING FLORES: Yes, thank you, Mr. President.

BY MS. GEHRING FLORES:

Q. Mr. Neil, I'm going to show you again the photo of the fugitive emissions coming off of the copper converters. Can you see that on your screen?

A. Yes, I can see it.

Q. This situation -- this fugitive emissions situation would not have changed until the copper circuit modernization was complete; correct?

A. That is correct.

Q. So the fugitive emissions coming off of the copper converters that were there during your time at DRP were also there during Mr. Buckley's time; correct?

A. I would think so.

Q. And just for clarification, Mr. Buckley was your predecessor as General Manager and President of DRP?

A. That is correct.

Q. So in 2004, you testified that you had a "wake-up call" with respect to the toxicity of fugitive emissions; is that correct?

A. The toxicity of lead contained in fugitive

[Page 212]

emissions, yes.

Q. Were you not concerned about sulfur dioxide fugitive emissions, Mr. Neil?

A. The fugitive emissions that you see in this photograph are intermittent, and some of the lead fugitives' low levels were much more steady than with the SO2. Certainly, lead is a health concern. It's chronic. It's a chronic situation. The SO2 can have an impact on some people more than others, perhaps, but it's a -- it really clears up where lead is chronic. It takes a long time for it to be completely gone from your exposure.

Q. I certainly understand that lead even after, say, the DRP smelting facility closed down, lead would stick around in dust and even soil, eventually, for many years. Is that what you're saying?

Even after a facility closes down, lead will be an issue.

Is that what you were talking about there?

A. It wasn't -- no, it wasn't what I was talking about. I was talking about the health implications.

Q. Okay. I mean, I guess, I'm -- sorry, go ahead.

(Overlapping speakers.)

A. What you said about lead in -- lead that is in soil, it doesn't -- it doesn't -- I don't want to say degrade. It doesn't go away.

[Page 213]

Q. Right.

A. It doesn't -- there is not a, like, a -- in the soil, it's there for a long time. That's correct.

Q. And, in contrast, SO2 dissipates; correct? SO2 or sulfur dioxide doesn't stick around like lead.

Is that what -- is that the distinction that you were making?

A. The distinction I was making was the impact on the person's health, with respect to lead, is a more critical issue than an exposure to SO2.

Q. SO2 only dissipates if the source that is emitting the SO2 stops; correct? Otherwise, you just have a constantly refreshed supply of SO2.

Am I correct on that?

A. SO2 disperses in the air.

Q. And if you have a source of SO2 to constantly refresh the SO2 in the air, is the SO2 going to dissipate?

A. If you have a constant source of SO2, then you would have a constant -- you would have a constant level of SO2.

Q. Okay. And understanding kind of the difference between SO2 and lead, lead sticks around, SO2 doesn't as long as the source is shut off -- understanding that difference, are you telling me that you think it would be recommendable to stick your face in a source that's

[Page 214]

emitting SO2 and take a deep breath?

A. No, that's not something you should do.

Q. Okay. So SO2 does have serious effects on human health; correct?

A. My understanding is that lead has a more serious effect than SO2. SO2 is something that can certainly give you a sore throat. If you were a person who had asthmatic conditions, then it's -- then it could be more -- certainly more serious than someone who doesn't. But SO2 -- it doesn't have the last -- it doesn't have the effect that lead can have, and once you're exposed to lead, it takes a while for the body to not have lead in it.

Q. So are you telling me that DRP's attitude to SO2 is that it just really wasn't a concern?

A. No, that was not the -- that was not the concern.

Q. And you would be concerned as --

(Overlapping speakers.)

A. SO2 -- a steady dose of SO2, is -- we tried not to have that. There were programs where -- where you would have the likelihood of a thermal inversion, for example. Then the Plant would be shut down, according to a protocol, and would stay down for the hours that that protocol required for the thermal inversion. This was a program that had been initiated by Mr. Buckley before I was there.

Q. But, again, Mr. Neil, you were concerned, then,

[Page 215]

about the amount of SO2 that the DRP facility was emitting; is that correct?

A. We were concerned about all of our emissions.

Q. And I understand you were talking about a process to shut down the Plant and, I guess, we'll talk about that in a second, but there's only one sort of project that will actually remove SO2 from the plant's emissions.

Am I right?

A. We're talking about the acid plant construction and building; correct?

Q. Is that your answer?

A. Yes.

Q. Okay. So only a Sulfuric Acid Plant could actually remove SO2 from DRP's emissions; correct?

A. None of the other Projects removed SO2, only the Sulfuric Acid Plant.

(Overlapping speakers.)

Q. There is no filter that can remove SO2; correct?

A. I'm only aware of the chemical processes, no filter.

Q. And by "chemical processes," that would be a Sulfuric Acid Plant; is that right?

A. Yes.

Q. And speaking about the program where you would shut down the Facility at different times, particularly

[Page 216]

during inversions where I understand the weather changes -- and not only the fugitive emissions, but emissions from the main stack can be highly impactful on the La Oroya community.

Is that what you're referring to about the shutdown -- the shutdown programs?

A. The shutdown program was a program to minimize the impact of the high-level emissions, the main stack, primarily.

Q. Now, DRP's production during your tenure as General Manager and President of DRP, and Mr. Buckley's tenure as General Manager and President of DRP, DRP's production stayed relatively constant; correct?

A. It stayed relatively constant during my time at -- in Doe Run, at Doe Run Perú.

Q. Did it go down?

A. It stayed relatively constant.

Q. If you were to do an average, a yearly average, would those data points ever go down?

A. I don't have the numbers in front of me.

The -- I would say, generally, the production was fairly consistent.

Q. Okay. So with the shutdown program, if you did shut down the smelting facility at different times, you would make up for it after you shut down; right?

[Page 217]

That's the only way for your production to remain generally consistent; correct?

A. Our -- I can't speak for all the time that Mr. Buckley was there, but my recollection is the numbers did not change all that much, certainly while I was there.

Q. Going back to 2004, when you had the wake-up call with respect to fugitive emissions, Mr. Neil, and their highly toxic impact on the community, once you had that wake-up call, why didn't you reduce the amount of inputs, or your production, if you had such a wake-up call?

A. I believed at the time that if we identified each of the sources of the fugitive emissions and prioritized them, that we could make an impact very quickly on those -- on the fugitive emissions.

It would mean that we would have to move some people who were working on -- on the Projects to -- I'm talking technical people, to make sure we understood what the amount of the emissions was, the measuring of it, and developing solutions and implementing those solutions, whether it was an engineering solution or whether it was building something, paving, washing vehicles, whatever the solution was, changing some of our protocols, that we would do that, and that we would have an impact.

Q. But just to be clear, Mr. -- I'm sorry.

A. And so we -- a number of these --

[Page 218]

(Overlapping speakers.)

Q. Go ahead.

A. And we did make a difference.

Q. But just to be clear, Mr. Neil, you never decided to reduce your production during that time -- correct? -- after your wake-up call?

A. We did not reduce our production, that I -- that's my recollection.

Q. Okay. Thank you, Mr. Neil.

MS. GEHRING FLORES: No further questions.

PRESIDENT SIMMA: Thank you, Ms. Gehring.

No further questions on your part?

MR. SCHIFFER: So I'm prepared to do redirect, except that I need to gather some questions from my group and consider them. I won't be -- I'm not very long; so could we have a -- I'm sorry to do this, but may we have a, like, a 10-minute break, and then I'll do the redirect?

PRESIDENT SIMMA: That's fine.

MR. SCHIFFER: Okay. Because I don't want to get in trouble with anybody. So I want to make sure I've got everyone's input.

(Overlapping speakers.)

PRESIDENT SIMMA: No, no. That's fine.

MR. SCHIFFER: Okay. Thank you.

(Brief recess.)

[Page 219]

PRESIDENT SIMMA: So, Mr. Neil, it's another break, right? So don't talk to anybody. And, Mr. Neil, I was going to tell you that for the 10 minutes that it will take Claimant to gather some questions, you're, again, supposed not to talk to anybody about the case.

THE WITNESS: That's fine. I won't talk to anyone.

PRESIDENT SIMMA: Thank you.

(Brief recess.)

PRESIDENT SIMMA: I think we are ready for the redirect.

Mr. Schiffer, you have the floor, sir.

MR. SCHIFFER: Thank you, Mr. Chairman.

REDIRECT EXAMINATION

BY MR. SCHIFFER:

Q. Hello, again, Mr. Neil.

A. Hello, Adam.

Q. The Expert for the Respondents in this case, I'm going to represent to you, has suggested that there was a hole or holes in the ductwork of the Facility that allowed fugitive emissions -- the emissions to be diverted from the main stack into fugitive emissions. That's his hypothesis.

You look puzzled. Did -- under your watch, did DRP ever do that, try to divert emissions from the main stack?

[Page 220]

A. There was never any attempt to divert emissions from the main stack.

Q. And if there -- I'm sorry.

A. If there was a leak of some kind, then there would be --

(Overlapping speakers.)

MS. GEHRING FLORES: Excuse me, Mr. Neil, just one moment.

I don't believe I asked any questions about that.

MR. SCHIFFER: She asked 100 questions about the detailed operations of the Plant, and I am just following up on that.

MS. GEHRING FLORES: That -- this idea of there being a hole never came up.

PRESIDENT SIMMA: May I try to help out?

MS. GEHRING FLORES: Yes.

PRESIDENT SIMMA: What I heard was not the word "hole." It was the word "gap." And Mr. Neil spoke about a gap between the machine and the hood while we saw the pictures. So maybe this is -- so "gap" instead of a "hole." Maybe that helps.

MR. SCHIFFER: It's just words. Yeah.

MS. GEHRING FLORES: Well, I honestly don't think that that's what we're discussing, but please go ahead and it should be noted that I did not ask any questions about

[Page 221]

this.

As Mr. Schiffer notes, I asked many questions about the operations. I did not ask any questions about a hole that DRP would have punched in -- no, I did not.

PRESIDENT SIMMA: I did not want to imply that you asked a question in that regard, but Mr. Neil described the -- how emissions got into the air, fugitive, probably. And one of the examples or the example that I remember was the one where he said there is this -- what he called a "gap," through which -- and I think that's probably what we saw on the photograph also -- right? -- this kind of thing coming out of that -- from under the hood. So that's what I meant. So I did not want to imply that you asked a question in that regard, just that the topic came up.

BY MR. SCHIFFER:

Q. Mr. Neil, under your management, was there maintenance performed daily, weekly on the Facility?

A. Yes.

Q. If there was a gap that was blowing considerable emissions within the Plant, is that something you think you would have been aware of?

A. Yes.

Q. And under your watch, would you just have let it go and let it keep pumping out emissions?

A. Of course not.

[Page 222]

Q. "Of course not."

Were there also audits done by third parties in the Plant while you were there?

A. We had audits done, yes.

Q. And who did those audits, if you can remember?

A. We had audits done by people that were brought in to examine what we were doing in the Plant, Gradient, a company called Gradient. A company called Integral did a health survey and worked in the Plant.

Q. Okay. So a lot of -- not just DRP people were in the Plant, but there were quite a number of interested strangers in the Plant as well. Is that what you're trying to tell us?

A. Definitely, there were some, yes.

Q. Okay. I want to shift gears and talk about fugitive emissions with respect to the amended PAMA in 2006. Okay?

A. Yeah.

Q. When did you first bring the subject to the MEM that there needed to be additional fugitive emissions projects?

A. I know that I wrote a letter in February of 2004. We had brought in, in 2003, Gradient to come in and help us understand some issues, and we had some internal discussions at the time. It would have been October 2003,

[Page 223]

perhaps September of 2003, that we needed to better understand fugitives in the Plant, that, perhaps, they were -- perhaps, they were impacting the health of the kids in La Oroya. And it wasn't until we received the Report at the beginning of 2004 that we had learned the impact of the -- of that. Dan Vanberg, I had asked him to come and have a look at -- he was an environmental VP from the U.S., but I asked him to have a look at some of the issues that -- some issues, environmental issues, and during that visit we had discussions about -- discussions about that.

I don't know that we talked immediately to MEM, but we were collecting some information internally to try to identify the extent of the emissions.

Q. But, in February 2004, you did bring all this to the MEM's attention?

A. Yes.

Q. And you did ask for an extension to add additional projects to address, specifically, fugitive emissions?

A. Yes.

MS. GEHRING FLORES: Would Counsel please refrain from leading the Witness quite so much?

MR. SCHIFFER: I'm just summing up what he's already said, which is acceptable, in any court of law, at least.

[Page 224]

BY MR. SCHIFFER:

Q. So, Mr. Neil, I'm sorry, before we were interrupted.

You -- what was MEM's response to your request for an extension to add fugitive emissions projects to the PAMA in 2004?

A. We did not receive -- we did not receive a response from MEM, in that -- well, not a direct response in the form of a letter. Nevertheless, we did start on the Projects that we had said that we were intended to do.

Q. Okay. You're jumping ahead of me a little bit.

Did the MEM, once they got your study and your letter, did they say, "absolutely. Let's get on this right away"?

A. I don't recall that. We certainly did not receive a response to the letter indicating what our intentions were going forward.

Q. Right. And --

A. And then --

Q. If I say to you that you made a request for an extension in 2004, but we -- it's in the record that you didn't get an extension until 2006, how would you judge the MEM's response?

A. Well, it was late.

Q. Okay. And I believe you've already testified

[Page 225]

that you didn't wait on the MEM to start these Projects?

A. That is correct.

Q. Now, can we pull up -- I'm sorry, do you mind pulling up the PAMA that you showed him and especially the fugitive emissions section. Yeah. R-87 -- I'm sorry, Page 87.

MS. GEHRING FLORES: I believe your hot-seat operator has it.

MR. SCHIFFER: I know, but I'm asking if you could do that.

MS. GEHRING FLORES: I don't know if we have control over it.

MR. SCHIFFER: Okay. If we could go to Page 87.

BY MR. SCHIFFER:

Q. So did -- you studied the PAMA, obviously, when you came on board. You testified to that.

Were you aware -- why did you need to add projects to the PAMA and to try to do it in 2004 if the PAMA addressed fugitive emissions?

Why would there be a need to add 12 projects?

A. Well, my conclusion was that the fugitive emissions were not seen as being one of the Projects that had to be included in the PAMA.

Q. Okay. Thank you.

A. And it was not included.

[Page 226]

(Comments off microphone.)

Q. And in the Report, are you aware that this discussion -- they're not about projects, they're just about sources of emissions by Centromín?

A. Yes.

Q. Okay. Let's go to Mr. -- the Expert Report with the picture of the smoke, please. And you were shown this several times. I'm going to show it to you yet again.

The equipment that was in the Facility when this picture was taken, do you know how old it was?

I mean, in other words, was it there when Centromín was operating the Plant, to your knowledge?

A. It would have been there.

Q. Right.

A. Yes.

Q. And so what would you have expected to see, had this picture been taken, let's say, in 1995?

A. I would have expected at least the same.

Q. Why do you say "at least the same"?

A. The smelter was old, the building -- the equipment was older. I know that the maintenance that Mr. Buckley had carried out on his watch, and what we were doing is that we were trying to keep up with -- stay ahead if we could, but try to keep up with the needs, of leaks, of keeping the equipment running. And I had monthly

[Page 227]

reports on what people were doing and maintenance, so I thought that we were doing well mechanically keeping everything running, and I cannot speak for -- I can't speak for what Mr. Buckley found when he got there.

Q. Right. We'll talk to him next.

Mr. Neil, it has been a pleasure talking to you. I have no further questions of you. Thank you so much.

PRESIDENT SIMMA: Thank you, Mr. Schiffer.

Mrs. Gehring, do you want to ask a question or somehow respond to that, give it a second opportunity?

MS. GEHRING FLORES: Just one.

PRESIDENT SIMMA: Sorry?

MS. GEHRING FLORES: Just one.

PRESIDENT SIMMA: Okay.

RECROSS-EXAMINATION

BY MS. GEHRING FLORES:

Q. Mr. Neil, the processing equipment that you inherited from Centromín, as you mentioned, was old; correct?

A. That is correct.

Q. Did that equipment get older or younger during DRP's tenure?

A. There were some changes made to equipment, particularly the Cottrell, but I would say that the equipment got older.

[Page 228]

MS. GEHRING FLORES: No further questions.

THE WITNESS: Okay. Thank you.

PRESIDENT SIMMA: Okay. Any --

MR. SCHIFFER: No, sir.

PRESIDENT SIMMA: Let me ask my colleagues whether they have questions at this stage.

ARBITRATOR GRIGERA NAÓN: I have one.

QUESTIONS FROM THE TRIBUNAL

ARBITRATOR GRIGERA NAÓN: One question, sir.

You were shown a page of the PAMA, I think it was Page 87, and there is a reference there to fugitive emissions. One of them that concerns sulfur dioxide, and the other one that concerns lead. In the case of lead, there is a reference to recordations, recording. I don't see the same wording when it refers to SO2, to sulfur dioxide emissions.

My question is: When the PAMA -- that portion of the PAMA came to life, was there any way of recording, quantifying dioxide emissions, sulfur dioxide emissions, and is there a difference between the possibility of recording lead emissions, as it is suggested in that page?

Am I being clear in my question?

THE WITNESS: I know there were sampling stations established very close -- where the people lived and in an area north and south of the smelter, so there was -- those

[Page 229]

sample stations were being monitored at all times. I cannot recall whether they were monitoring SO2, but I believe that they were monitoring SO2 and that we had both lead information and SO2.

The PAMA required a -- the ECAs were the level of contaminant in the air; whereas, the LMPs were the tons of emissions or pounds of emissions over a period of time, as measured. So I believe there were measurements taken of both.

ARBITRATOR GRIGERA NAÓN: Thank you.

PRESIDENT SIMMA: May I just ask one or two questions depending on your answer, Mr. Neil.

I remember that either you said or it was said that the PAMA did not contain, did not deal with fugitive emissions. And then you were shown -- I think it might have been the Page 87 in that document -- where you have paragraphs on emission, SO2, and lead, so I wondered why -- could it be that -- if you look at these texts on Page 87, they read like a page out of a textbook. I would have expected that PAMA is about requirements, that if you want to work there, you have to establish certain things, I require certain measures that you take.

But the text there on Page 87 just says what usually happens there is some bad things get out of the machine and so on and so on, and so it is really more of a

[Page 230]

description for a layman, and even I could understand it, essentially.

So my question would be, is that the reason there might be -- a little leading -- is that the reason why you thought there wasn't anything, let's say, relevant on fugitive emissions in the PAMA?

Maybe I'll add my second question right away because it -- I get back, once again, to that gap.

When you were asked how the fugitive emissions -- how do they -- where and when and how do they get out of the plant into the atmosphere? You described, and one of your descriptions was about the converter machine, a hood about the converter machine, the fact that the converter machine was kind of a turnable in order to -- it had to do with blowing air. So it all sounds interesting stuff. And then you said, to this gap there will be -- let's say, emissions cans escape.

My question in that regard is, is that -- was that at the time the state of the art, the standard in the industry?

Are such gaps a thing that cannot be avoided, or was it just that the old stuff that you found there was -- had these, let's say, shortcomings?

I hope I made myself clear.

THE WITNESS: I'll speak to the -- if I answer

[Page 231]

your question, you can stop me, but the issue with the converters, those converters and the hoods were very similar to what I saw in 1970 in the copper smelt in Canada. They were probably a little larger, maybe more effective than they were 50 years ago.

My understanding of the technology now is that people are putting a large -- a hood over a hood, like something that collects -- it's a bigger area. It collects what the main hood doesn't collect.

But the converters are very similar. The new technology may have a -- the second hood which could be lighter weight and then can sit closer because it can be lowered down, moved. I think that is a technology change that has been introduced. So that's one thing.

Another is that, I guess, that's the major thing, the question on the hood, and there on the gap. The reason you leave a gap is because these things weigh tens of tons, more than 100 tons, and if something is moving and steel strikes steel and it weighs 100 tons, it wrecks it. So then you damage the hood. You have to -- you can't use the converter the way you were doing it before. So there you need to have a gap.

The other question -- your first question -- did I answer your second question about the hooding and the technology?

[Page 232]

I think there is some newer technologies that are more efficient and there are -- and the hood design has changed so that there is more collection of what's called "fugitives." Okay? Fugitive is basically what evades, what gets away from your intended collection.

If you were trying to collect the gases to go to an acid plant or the SO2, you need to have as tight a gap as you can. So there's a few, though, that you collect all the sulfur. The problem is if you bring in a lot of external air, then the SO2 level is lower and the technology that we use for acid plants does not work. You have to have a certain kind of critical level of SO2 in order for the conversion, and all of that that was talked about of SO2, in order to make the acid plant technology function.

In the case of a converter, it could be fairly low, so you would combine it with something else that was higher SO2 to meet that level. So you can't have a lot of trapped air getting in, and it's a little bit of a balance.

On the first question of the fugitives and the debate about what "fugitive" means, it is what evades the collection system. And if you were able to collect all of it, then none of it evades. If you're not able to collect all of it because you want a certain SO2, then what evades -- you have to find another way to capture it.

[Page 233]

You could capture it by sealing a building, cooling the air, putting bag houses on all the ventilation, and then you still will have some dust getting out. And in Perú, there were skylights, sky openings for fresh air to get in because it would be too hot.

So those openings allow things to escape, dust to escape. Once it's in the air, and it settles and blows around. And once it's in the air at a low level, then it was those fugitives were going according to the wind. And if the wind took them into the town, that was that way. If they took them the other way, it was the other direction, it was the other way.

So those fugitives will be estimated. How many fugitives were escaping from each building and each area and from handling of vehicles, we realized that we had to do many more Projects than were on the list of the PAMA. So we initiated those and started those.

As we sealed buildings, it meant we had to have more fresh air going into the building, so we needed bag houses to collect all those, all that air.

PRESIDENT SIMMA: Thank you very much. Thank you very much, Mr. Neil. Thank you. Thanks for your answer.

There is a question now by Mr. Thomas.

ARBITRATOR THOMAS: Thank you, Mr. Neil.

This is just a clarification of a statement that

[Page 234]

you made earlier in response to a question from Mr. Schiffer, and it concerned the request that you sent in 2004 to MEM. And you were asked about the response, and I made a note of how you answered that question which was -- you said that "there was no response from MEM in the form of a letter."

And the question I had was, was there any kind of oral response? Did you have meetings with MEM, or was this entirely conducted through correspondence?

THE WITNESS: We met regularly with MEM. That is -- that was -- that is true. I cannot tell you the meetings that we had because I can't recall them, sir, but I know that throughout my term in Doe Run Perú and somewhat afterwards that we regularly met.

My experience with written communication with MEM was that that was assurance that the information that we had or were seeking was passed on, and we received a written response for, I would say, all the time. I was not given a response. I can only speculate why they chose not to respond to that letter, but we did not get a response to that letter until the December when the MEM issued a letter saying that there was a law in place now and that all the terms of the law which was -- which we used to make -- we used that letter to form the basis of our formal request a year later for the extension.

[Page 235]

ARBITRATOR THOMAS: Thank you.

PRESIDENT SIMMA: Thank you. I think that brings to an end the cross-examination of Mr. Neil.

Mr. Neil, thank you very much for your answers, your patience, and the precision of your answers. You are hereby released, and, in a sense, a free man again.

Thank you very much.

THE WITNESS: Thank you.

(Witness steps down.)

PRESIDENT SIMMA: Now, the question is, we have -- according to our time schedule, we have half an hour left, so should we go into the next examination?

My guess is that it will take a few minutes to have the next witness set up, if I may say, or should we just have an earlier lunch break, combined with the hope that the food will be warm. It is not earlier.

MR. PEARSALL: In our view, Mr. President, subject to the logistics, I think there is sufficient time for, at least, the direct, and then we can take our lunch break and then have the cross.

PRESIDENT SIMMA: Okay. All right. Good. All right.

Thanks, Mr. Neil.

And we get the next witness ready.

MR. SCHIFFER: So the next witness is also by

[Page 236]

video, and that is Ken Buckley, so I guess we need to switch over to his feed, which is, fortunately, out of my hands.

(Brief recess.)

KENNETH BUCKLEY, CLAIMANTS' WITNESS, CALLED

PRESIDENT SIMMA: Hello, Mr. Buckley. Thanks for appearing in front of us. You should have in front of you a declaration which I would like you to read out slowly.

THE WITNESS: I'm sorry. I'm having a problem.

SECRETARY DOE: Mr. Buckley, you should, hopefully, see a small document.

THE WITNESS: Hold on a minute. I've got the tech coming back.

(Comments off microphone.)

THE WITNESS: Okay. My tech is just helping out. Yes, I'll read it.

I solemnly declare, upon my honor and conscience, that I will speak the truth, the whole truth, and nothing but the truth. There is no unauthorized person present in this room with me, and I cannot communicate with anyone else during my testimony.

PRESIDENT SIMMA: Thank you, Mr. Buckley.

And I'll give the floor to Mr. Schiffer for what we call the "direct," you are being directed.

Mr. Schiffer, you have the floor.

[Page 237]

MR. SCHIFFER: Thanks.

DIRECT EXAMINATION

BY MR. SCHIFFER:

Q. Hello, Mr. Buckley.

A. Good morning.

Q. How old of a man are you, sir?

A. 85.

Q. And I know you retired. How long have you been retired?

A. 20 years this year.

Q. And from what company did you retire?

A. Well, it was from Doe Run Perú/Doe Run Resources.

Q. Okay. I want to talk to you about your involvement with the Facility in Perú.

When was your first -- when did you first lay eyes on the -- what's been referred to as the "CMLO" or the La Oroya smelter?

A. That would be late August, early September of 1997.

Q. What was your purpose in going down and looking at it?

A. The purpose was that we had been given the bid. Originally, it had gone to the Mexicans, but they declined to go forward. We were the next, and I was asked to go down with a small Doe Run team to take a look at the

[Page 238]

Facility.

Q. And on a scale of, let's say, 1 to 5 -- 1 being not good at all and 5 being very good -- how would you describe the efforts that Centromín was making, in the time you visited, to control emissions?

A. When I first went there, I think it was a 2, but then, when we visited again, it was a 1, as we got more information.

Q. And if you could just briefly explain what you saw that makes you say it was a 2 and then a 1.

A. Well, I got more -- I was able to get into the Plant and take a look more closely. There was obviously -- there was a very much lack of maintenance. There was a very large hole in the gas-handling ductwork. It appeared that the dust collectors were not working, the bag houses, and the electrostatic precipitators were not working. And there was, you know, some nasty-looking liquids pouring out of the Plant into the river nearby. And we did a walk around, what I would describe as old La Oroya, and it was obvious -- I mean, it was very contaminated.

And there was one incident that caught my mind. There was a bulldozer operator operating and pushing -- it was at the arsenic stockpile. He had a hardhat on, but he had no, what I would call, special breathing equipment

[Page 239]

protection. He appeared to be in his street clothes. It did not strike me as an operation that was, you know, on top of their employee safety and health.

Q. And that leads into my next question: When you went down for your initial site visit, did you see workers in the Plant?

A. Yeah, obviously, we went through the Plant. The -- yeah, we visited all areas of the Plant, obviously. We were on the -- I would call, the initial due-diligence search.

Q. Right.

A. And -- yeah, there was -- you know, we saw, again, workers, operators in various toxic parts of the Plant -- lead, cadmium, and I spoke about arsenic too had less than efficient breathing protection. Let's put it that way.

Q. When you became the General Manager/President of Doe Run Perú, did you take any immediate actions to try to fix the obvious problems that you have explained to us?

A. Yes. Of course.

Q. Can you tell us what you did?

A. Well, yeah. First thing we did was I brought out to Perú from the States, going by mental health people and put them to work organizing proper protection for our employees, breathing apparatus, in terms of half masks,

[Page 240]

full masks, whatever was required. I informed people that they had to be in compliance with U.S. OSHA regulations regarding protection, breathing protection.

Q. Okay.

A. We also then organized a -- well, several crews. We put to work repairing, where necessary, replacing the ductwork which was the cause of a lot of the emissions that were coming from the operation. And so the initial stages was to, you know -- patch what we had, repair what we had, and get the emissions under control as best we could with equipment that was already in place, again, simultaneously working on our worker protection. Those were things I remember I think we did immediately we moved in. And I remember I told the Manager of Operations to get that awful-looking liquid pouring out of the Plant stopped, which he did.

Q. And was there someone that you appointed within DRP, Doe Run Perú, to manage the PAMA Projects, to be the person directly involved under you?

A. Oh, oh, oh, yeah. I think I appointed Dr. Juan Carlos Huyhua as the Operations Manager.

Q. And how about José Mogrovejo? Was he someone --

A. Oh, he didn't come on until maybe a year after we started up there. I was using a very competent environmental guy from the States. His name was Dan

[Page 241]

Vanberg. I had a lot of confidence in Dan. He'd worked with me on several projects before. And I also had brought down with me, on a permanent basis, a gentleman called Tony Worcester as the Technical Manager. He also had worked with me on several projects. And those were people I had great confidence in, and those people, in those first months, they were basically on a permanent basis in La Oroya.

Q. And while you were in charge, were the PAMA Projects being conducted according to the schedule of the PAMA?

A. Yeah. I mean, the PAMA was modified periodically, but only with the blessing of Ministry of Energy and Mines, and, to my knowledge, when I retired, we were in compliance with the PAMA and always had been. And over the years, Ministry of Energy and Mines would send their people in to audit what we were telling them was correct and would sign off on the various projects that we completed.

Q. You left Doe Run Perú in 2005, the end of 2005?

A. No. I retired in January 2004.

Q. Okay. Oh, that's right. I'm sorry. And would you say you left the Facility better or worse than when you got it?

A. Much better.

[Page 242]

Q. Okay.

MR. SCHIFFER: We're finished with our direct.

PRESIDENT SIMMA: Thank you, Mr. Schiffer.

So we only have a few minutes until the lunch break, so I think this is a good moment to stop.

So Mr. Buckley, you are supposed not to speak about that case with anybody around you, and I hope that, even though without talking about the case, you will have a good lunch, if at your end it's the time for lunch. So we'll see each other again at 1:35. At 1:35. Let's make it 1:45, 1:45. Thank you.

THE WITNESS: Thank you.

(Whereupon, at 12:35 p.m., the Hearing was adjourned until 1:45 p.m., the same day.)

AFTERNOON SESSION

PRESIDENT SIMMA: Okay. So let's have Mr. --

MR. PEARSALL: Before the Witness arrives, Mr. President, just two housekeeping issues, if I may.

PRESIDENT SIMMA: Please.

MR. PEARSALL: The first is, we are going to show Mr. Buckley a handful of documents. If it's helpful to the Witness, we're happy to have someone in the room with him for technical assistance.

MR. SCHIFFER: There is somebody in the room with him for assistance.

[Page 243]

MR. PEARSALL: Excellent. And then the second
point is, the principal examination will be conducted by my
associate, Mr. Brian Vaca, and after he'll be followed by
my partner, Gaela Gehring Flores, who will ask Mr. Buckley
just some questions solely on the newly admitted SVS
Report.

PRESIDENT SIMMA: I didn't understand the last
word you said were --

(Overlapping speakers.)

MR. PEARSALL: She will conduct -- she will
conduct a brief examination solely on the SVS Report; so
the scope is completely different.

PRESIDENT SIMMA: Ah, okay. Okay.

MR. PEARSALL: Okay?

(Interruption.)

MR. SCHIFFER: I have one question.

MR. PEARSALL: And if the Witness could be
excused, just until we finish.

MR. SCHIFFER: Yeah, yeah. Yes, I agree. If we
can put him back in the waiting room. Hang on.

(Comments off microphone.)

MR. SCHIFFER: Mr. Chairman, I have a point of
clarification. Typically, cross-examination needs to be at
least loosely tailored to the Witness's Statement and to
his personal knowledge, and I just -- I don't know what the

[Page 244]

rule is for this. For example, the SVS Report -- he can
ask him if he's seen it, but if he hasn't seen it, you
know, I don't know what the point of the questions would
be. But I just want clarification before we get into it.
That's all.

MR. PEARSALL: Sure. The SVS Report was drafted
during his tenure. It was recently introduced; so it
wasn't part of his Witness Statement. We just have a few
questions on it.

MR. SCHIFFER: Again, if he's familiar with it,
then fine.

(Interruption.)

PRESIDENT SIMMA: Renco I; right? It was in the
Renco I case?

MR. PEARSALL: It was recently introduced. It
was part of the discussion that the Parties had with the
Tribunal last month about new documents coming in, and it
was drafted during his tenure. Obviously, we'll ask him
about whether he has knowledge of it, and we'll go from
there.

MR. SCHIFFER: Yeah. Of course. If he has
knowledge of it, I have no problem. If he doesn't, then I
have an issue.

PRESIDENT SIMMA: "Miremos."

MR. PEARSALL: Okay. Thank you.

[Page 245]

MS. GEHRING FLORES: One more point,
Mr. President. Sorry. But you were right, that the SVS
Report was part of the Renco I record.

PRESIDENT SIMMA: Yeah.

(Comments off microphone.)

PRESIDENT SIMMA: All right. Okay. Now, were we
on -- okay. So it's all there. So we just continue being
on.

So, Mr. Buckley, and the question you wanted to
ask was the one that we discussed; right? It is not
something that you want to reengage in.

MR. SCHIFFER: No. No. No. No, sir.

PRESIDENT SIMMA: No? Okay. So -- okay. Thank
you, Mr. Buckley. Thanks for being back. Can you
understand me? So we don't hear you.

(Comments off microphone.)

PRESIDENT SIMMA: I hear you, but not
Mr. Buckley.

THE WITNESS: Can you hear me?

PRESIDENT SIMMA: Okay. Yes, Mr. Buckley. Thank
you. We're fine now.

Mr. Buckley, you are now going to be
cross-examined -- by Mr. Vaca?

MR. VACA: Mr. President, my name is Brian Vaca.

PRESIDENT SIMMA: Brian --

[Page 246]

MR. VACA: Vaca.

PRESIDENT SIMMA: Vaca. You have the floor.

MR. VACA: Thank you, Mr. President.

CROSS-EXAMINATION

BY MR. VACA:

Q. Hi, Mr. Buckley, my name is Brian Vaca, and
together with my colleagues, we represent The Republic of
Perú and Activos Mineros in these arbitrations.

Can you hear me well?

A. Yes, I can hear you very well. Thank you.

Q. Great. I will be asking you some questions today
about the testimony that you submitted in this Arbitration,
and a few documents where you are referenced, and if at any
point during this examination you need a restroom break,
please let us know and we can take a pause. We do really
appreciate you being here today, Mr. Buckley.

And, given that I'll be asking you some questions
that will probably be in your testimony, you can have, if
it's easier for you -- you, of course, can have your
written testimony in front of you. If you're ready to
begin --

A. I do have it.

Q. Apologies. But...

A. I say, I do have the testimony in front of me.

Q. Great. So if you're ready to begin, we'll

[Page 247]

proceed. Mr. Buckley, I would like to start by asking some
basic questions about your experience before joining Doe
Run Resources Corporation.

Before you joined, you had, at that point, many
years of experience as a metallurgist; right?

A. Yes.

Q. In fact, just to -- I guess, just to name one
example, from 1964 to 1977, you worked in the mining and
metallurgical industry -- and I believe you referenced in
Zambia, Uganda, and Botswana; right?

A. That is correct.

Q. Okay. And just to jump, I guess, about a decade
after that; so we said that experience was from 1964 to
1977. So in -- a decade later, about 1986, that's where
you joined Doe Run Resources Corporation?

A. That is correct.

Q. Okay. And you held various managerial positions
for about a decade; right? From 1986 to about 1997?

A. Correct.

Q. And, I guess, we can say that your experience at
that point was so great that, by 1995, Doe Run Resources
appointed you as Vice President of Smelting; is that right?

A. Correct.

Q. And about two years later -- so, now, we're in
September 1997 -- you began serving as the President and

[Page 248]

General Manager of Doe Run Perú; right?

A. No, it was in the October.

Q. Mr. Buckley --

A. I'm just trying to correct. September, October.
If my memory serves me right, it was after we had completed
the purchase of what was then Metaloroya, and I was
appointed a General Manager, and then several months later
I was appointed President.

Q. Okay. Sorry, because just in your Witness
Statement you mentioned from September 1997 until
September 2003, and that's in Paragraph 3, that you served
as President and General Manager.

So are you making a correction? It's not
September 1997 that you served as President and General
Manager? It's instead October 1997?

A. Ah, memory plays tricks. Let's leave what it is
in my testimony. I'm 85. When I did the testimony that
was, I think, 10 years ago, that was probably more
accurate.

Q. That's okay, Mr. Buckley. I just want to make
sure I have the dates right. Thank you. And as President
and General Manager of Doe Run Perú, would you say you were
the highest-ranking executive in Doe Run Perú?

A. Yes.

Q. And during your years -- or during your role as

[Page 249]

President and General Manager of Doe Run Perú, you were
responsible for reporting to Jeff Zelms; right?

A. Correct.

Q. Jeff Zelms was your direct boss, you would say,
at that time?

A. Correct. Correct.

Q. And Jeff Zelms -- he was the President of Doe Run
Resources Corporation at that time?

A. Correct.

Q. Would you say, Mr. Buckley, that while you were
President, you were President and General Manager of Doe
Run Perú, you were in charge of Doe Run Perú?

A. Correct. Yes.

Q. I'm going to ask you a few questions,
Mr. Buckley, that relate to your direct testimony just
about an hour ago. Just to confirm, I believe you said
that in late August 1997, you went down to Perú to visit
the Facility; is that right?

A. Memory serves me, yes.

Q. And you went down to -- is it fair to say you
went down to perform due diligence of the Facility?

A. I don't remember whether it was August or
September, but whatever is in my testimony is probably the
accurate version, but we went down to do due diligence,
yes.

[Page 250]

Q. And from those visits, from those initial -- I'll
call it the initial visits to La Oroya, with all the
experience that you had at that time, you would say at that
moment it was obvious that the Facility needed vast
improvement; right?

A. Yes.

Q. Okay. And I believe in your direct testimony you
said you visited all areas of the plant -- right? -- when
you went?

A. Yes.

Q. Mr. Buckley, I'd like to shift gears just for a
little bit. I'd like to talk about certain obligations DRP
had under the Stock Transfer Agreement or the STA.

Are you familiar with that document?

A. I was not involved in any way in that Stock
Transfer arrangement. That was handled, really, by Renco
people. I was directly involved in due diligence of the
La Oroya Plant and the surrounding, let's say, properties.

Q. Understood, Mr. Buckley. I can promise, I'm not
going to ask you detailed questions about the Contract,
but, I guess, just to understand a little bit about how
much you knew about the Agreement, outlined in the STA, do
you know that that -- the STA that was signed on
October 23, 1997?

A. I don't recall. I'm sorry. I don't recall.

[Page 251]

Q. It's okay, Mr. Buckley. We can move to the next
question.

I guess the important part here is we -- I just
want to make sure you know that part of the Agreement in
the purchase was that DRP had to make a capital
contribution of approximately $125 million.

Are you aware of that?

A. Yes.

Q. Okay. And now I want to discuss what was done
with that capital contribution.

You're aware -- I assume you're aware, given that
you were President and General Manager of Doe Run Perú at
the time, that on the day DRP purchased the Facility, DRP
took $125 million of that capital contribution and lent it
to Doe Run Mining in an interest-free loan.

Are you familiar with that?

A. I must be honest with you, I don't recall the
details. I'm thinking, because every -- no. This is
27 years ago. I'm having trouble recalling those details.
I'm sorry.

Q. It's okay, Mr. Buckley. I guess I'm just asking
the question and, of course, I can appreciate that it was a
long time ago, but given that it was $125 million, and you
were President and the General Manager of this Company, I
just want to know if you knew that those $125 million did

[Page 252]

not stay in the Company? Were you aware?

A. Oh, yes. Yes, I was aware of that.

Q. Mr. Buckley, while you were President and General
Manager of Doe Run Resources, did you ever think that
decision to take those $125 million out of Company would
generate financial problems for DRP?

A. No, I did not.

I -- frankly, had confidence in our owners,
Renco, that they knew what they were doing, and, of course,
I had great confidence in Doe Run Resources in the States.
So, no, I don't believe at the time it made any strong
impact on me. And that's as I recall.

Q. Okay. Mr. Buckley, and that's your -- what you
recall was your position the entire time you were President
and General Manager of Doe Run Resources?

A. Ah, I don't recall a time when I felt that those
funds were impacted impacting us to do what we
wanted to -- you know, what we had to do. I really didn't
factor it into my thinking. We were, you know, obliged to
carry out our obligations with -- from, let's say, our own
resources. So the 125 million never really factored into
my thinking. I just felt we had to complete our
obligations from our own resources, and that was the
understanding when we took over La Oroya. I mean, that is
how I thought.

[Page 253]

Q. Understood, Mr. Buckley. So I guess, just so I
can make sure it's clear, that answer that you just
gave applies for the entire time you were General Manager
and President of Doe Run Resources, meaning that what you
just expressed, those were your feelings from 1997 through
when you finished, which I believe you said in your direct
testimony was 2004?

A. Yes, indeed. I don't recall any time when I was
a President and General Manager that that became a major
issue for me. I don't recall any time that I felt that was
impacting us. It just didn't register into my thinking. I
never at any time thought about that. I was more
concentrating on, you know, meeting our obligations from
our own resources, that that was my focus.

Q. Okay, Mr. Buckley. Thank you for that answer.

I want to show you Exhibit R-85. My colleague is
going to put it on the screen, and I would just like you to
confirm when you're able to see the document.

A. Oh, yes, I remember this document.

Q. Okay. So, Mr. Buckley, this is a memo from you
to Jeff Zelms.

Do you see that?

A. Yes, indeed.

Q. And as we discussed earlier, Jeff Zelms was your
direct boss at the time. He was the President of Doe Run

[Page 254]

Resources; right?

A. Correct.

Q. Okay. And the date of this memo is
September 4, 2000.

Do you see that, Mr. Buckley?

A. I do.

Q. And in this memo -- I'll ask my colleague to
scroll down just a little bit to "current status"; so that
we can see the first paragraph of "current status."

A. I -- it's coming up.

Q. Okay. And in this memo, Mr. Buckley, you're
sharing with the President in -- of Doe Run Resources that
you believed Doe Run Resources was facing a liquidity
crisis problem; right?

A. Yes.

Q. Okay. Let's look at what else you said in this
memo, Mr. Buckley.

If we go to Page 3 of the memo. And we'll make
the text larger, Mr. Buckley.

A. Thank you.

Q. So at the top, if you can see, there's a -- I
guess, we can call it a section called "issues."

Do you see that on the top left?

A. Well, I see: "The time for business as usual."
Is that the one?

[Page 255]

Q. Yeah. That section. I'm just mentioning that
there's a title that's underlined. It says "issues,"
before the bullets.

A. Yes, I see that.

Q. Okay. And if we look at the third bullet,
Mr. Buckley, I want to read one thing that you said here.

In the third bullet, you said: "Doe Run's troubles are
largely an issue of financial structure."

Do you -- it's the first sentence.

Do you see that, Mr. Buckley?

A. I do.

Q. Okay. And a few lines below in the same bullet,
it starts at the fourth line of the third bullet. I'm
going to read something else that you said. It said -- you
said: "The problem is that, in aggregate, our businesses
are insufficiently profitable to support our debt load,
particularly in this business environment."

Did I read that correctly, Mr. Buckley?

A. Yeah, but for whatever reason I can't read it
anymore, but I can hear you. Okay. I got -- all right.

Q. Okay, Mr. Buckley. So I'll move to the next
paragraph.

In the fourth bullet, you then said -- and I'm
quoting here: "Doe Run is severely capital-constrained,
and unable to fund numerous high-return Projects now

[Page 256]

available."

That's what you said there; right?

A. Yes.

Q. And just to confirm, you use the word "severely"
to characterize how capital-constrained Doe Run was; right?

A. Correct.

Q. Okay. And if we go down two more bullets. This
would be the sixth bullet on the document. And apologies,
my colleague will pull it back up, Mr. Buckley. Just --

A. Okay.

Q. So we're at the sixth bullet. And in the sixth
bullet, you said: "Larger revolvers and/or additional
borrowings, if available, would only delay the inevitable.
Our debt level is the problem."

Did I read that correctly, Mr. Buckley?

A. Yes.

Q. And I apologize in advance because we're going to
read just a few more, where there are two more bullets I
would like to read, I would like you to confirm.

At -- in the seventh bullet, the first sentence
you say: "All the above illustrate that Doe Run's business
model, 100 percent debt financing, is flawed, at least for
companies with heavy capital investment requirements."

Did I read that correctly, Mr. Buckley?

A. Yes.

[Page 257]

Q. So I'm going to ask you again, and, I guess, I'll
rephrase it a bit. Mr. Buckley, at this time in September
of 2000, when you sent this memo to your direct boss,
Mr. Jeff Zelms, it was your opinion that the financial
structure and the business model of Doe Run was not
working; right?

A. That is what we said at that time.

Q. Correct. In September 2000; right?

A. Yep.

Q. And, in fact, at that time, Mr. Buckley, I think
your beliefs were so strong about how flawed Doe Run's
business model was that you said in this memo you were
"unaware of any company, in any industry, that had managed
a similar feat to the one Doe Run was trying to manage";
right?

A. Yes.

Q. And, in fact, your -- I would say your beliefs
were so strong at that time that you raised this issue, not
only to your boss, Jeff Zelms, but you recommended that he
present it to the CEO of the Renco Group, Mr. Ari Rennert;
right?

A. Yes.

Q. And I would add, I guess, one more point here is
that, to confirm, that you thought the issues with the
business model were so flawed that your last message in

[Page 258]

this memo -- so if we go to the final page -- to your
superior was -- and I'm reading from the memo, the final
line -- that you urged to "create a sense of urgency as to
addressing all of the above, develop an aggressive work
plan with strict accountabilities and deadlines."

Did I read that correctly, Mr. Buckley?

A. Yes.

Q. So, Mr. Buckley, I'm trying to put myself back in
this time, in the year 2000. I think we discussed a little
earlier that you were the boss in Perú -- right? -- for Doe
Run? Meaning you --

A. Correct.

Q. You were the person that knew the most about what
was happening with Doe Run Perú at that time, meaning if
anyone's opinion about how Doe Run Perú was doing was
important, it was probably yours; right?

A. Yes.

Q. And just to be clear, Mr. Buckley, in this memo
where you're expressing to Jeff Zelms the liquidity
problem, nowhere did you mention any Peruvian State entity,
like the MEM, being the problem; right?

A. You're going to have to repeat that. I'm sorry.

Q. Apologies.

That here you're expressing the financial issues
that Doe Run Perú is facing; right? In this memo?

[Page 259]

A. Yes. Yes.

Q. At no point in this memo do you mention that part
of the problem was some act of the MEM, the Ministry of
Energy and Mines of Perú.

A. Well, this was -- can I comment?

Q. You can answer, Mr. Buckley.

(Overlapping speakers.)

A. Well, this was a memo written by myself and the
chief financial person for Doe Run Perú, a Mr. Ken Hecker.
And this memo, I felt, it was -- it was our responsibility
to inform both Doe Run Resources and, through them, Renco
of our thoughts. And this memo was written when there was
a metal price collapse. I think, if my memory serves me,
middle to the end of '99, and that put enormous stress
on -- well, frankly, the whole of the mining industry.

I felt we had a responsibility to give our
thoughts and recommendations to the people we work for. I
think not to have done so would have been a dereliction of
our responsibilities. It so happened that after we wrote
this letter, there was a significant decrease in the
funding we were sending to the United States, and as it
turned out, the -- we went forward.

We were able to meet our obligations, and
particularly with regards to the PAMA, and just as I've
said, and we got support in terms of -- you know, I call it

[Page 260]

financial release from sending money to the United States.
And that helped. So all my thoughts of local doom and
gloom did not come to happen because we certainly went on
for another -- until I retired, which was in January of
2004, and were able to meet our obligations.

So, yes, we wrote the letter, a memo. I felt at
the time there was a necessity to do -- let them know our
thoughts, but maybe our gloom and doom, you see, was a
little overwritten. But that's my response to this letter,
memo.

Q. Thank you, Mr. Buckley.

Mr. Buckley, you understand this Hearing is being
broadcast publicly; right?

A. I beg your pardon?

Q. So yeah, we took documents off the screen, but
can you see us, or can you see me and hear me, Mr. Buckley?

A. I can see you, yes. I can see you, sir, yes.

Q. Okay. Great. Yeah, we took the documents off
the screen. So they're -- I'll just move on to one more
topic. I just want to make sure, Mr. Buckley, you
understand this Hearing is being broadcast publicly; right?

A. Public, you meaning -- no, I don't know what that
means.

Q. Meaning that, you know, people in every state in
the United States and outside of the United States can view

[Page 261]

this testimony.

A. I didn't until you just told me.

Q. Oh, well, I'll just represent to you that this is
a public hearing, just for your awareness.

Mr. Buckley, while you were President of Doe Run
Perú, did Renco and Doe Run Resources control the decisions
that Doe Run Perú made?

MR. SCHIFFER: Mr. Chairman, this is not relevant
to our case, it is a central issue in the litigation, and
what Counsel is now trying to do is to build a record, in
litigation, which it has nothing to do with this case, and
I think it is really below the belt, actually. So I object
to this line of questioning.

(Comments off microphone.)

PRESIDENT SIMMA: I was asking Perú for a view on
that matter before we three congregate. Okay.

MR. VACA: Thank you, Mr. President.

BY MR. VACA:

Q. The questions I am about to ask actually relate
to the Contract case. They are unrelated to the other
litigations that are happening at the same time. These are
questions that are relevant for the Contract case -- the
Contract Arbitration. Apologies.

MR. SCHIFFER: Mr. Chairman, I would like him to
at least preview with the Tribunal what those questions are

[Page 262]

because whether Renco controls DRP is not an issue in this
case. That's not a legal -- there's nothing in the
Contract and the legal standard for indirect Parties
doesn't require any showing like that, and I just -- this
is really inappropriate. I mean, you know -- he even said,
"you know this is being publicized" -- you know -- "being
aired to everyone in the world," meaning the Plaintiffs'
lawyers in the litigation. This, if anything, it should
not be public if he wants to pursue an irrelevant line of
question that has nothing to do with this case, and
that -- frankly, shame on them.

PRESIDENT SIMMA: Could I ask Mr. Vaca to kind of
indicate where the Contract questions will be --

SECRETARY DOE: Should we put Mr. Buckley in the
waiting room?

PRESIDENT SIMMA: Yes.

SECRETARY DOE: Mr. Buckley, we're going to put
you back into a breakout room just to pause while we sort
this out. Just so you know that. Great.

I think he should be back in the breakout room
there.

MR. VACA: Just thank you to Mr. Schiffer for the
objection. I do think it's important to address this
issue, Mr. President.

The questions we are going to ask are relevant

[Page 263]

for jurisdictional issues, primarily whether Doe Run
Resources and Renco were nonsignatories. So that's the
point of the questions.

MR. SCHIFFER: May I please respond to that?

PRESIDENT SIMMA: Sorry?

MR. SCHIFFER: May I please respond to that?

That is ridiculous. The document speaks for
itself. He says whether they are signatories or
nonsignatories? They did sign -- the document shows they
signed it. So what does that have to do with the issues in
this case?

MR. VACA: Apologies, Mr. President.

PRESIDENT SIMMA: Go ahead.

MR. VACA: No, Mr. President, I mean -- I believe
one of the first things in the Opening that Mr. Schiffer
said was the documents are the documents, but we need to
cross-examine witnesses to understand the case, and it's
our position that those questions will be relevant.
Everyone knows what the documents say. We need to know
what was happening at that time, and we believe that will
be helpful for the Tribunal for this issue.

MR. SCHIFFER: Mr. Chairman, if he wants to ask
if Renco and DRRC signed the Agreement, I have no problem
with that question. But the question of control has
nothing to do with that.

[Page 264]

PRESIDENT SIMMA: Mr. Vaca, when you say "were
signatories or not," do you mean that in the formal sense
that were -- put their names under the document, or did you
use that expression in a wider -- can you explain and then
maybe we can decide there.

MR. VACA: Thank you, Mr. President.

No, it does not relate to whether they signed the
document. I mean, one of Claimants' -- one of the
objections was that they were not signatories, and
Claimants are claiming that they are -- they should be
allowed to be in this Arbitration because they are
nonsignatories and want to bring them in through certain
theories, and we believe there are questions that we can
ask that will help the Tribunal evaluate whether they meet
the requirements to qualify as a nonsignatory.

MR. SCHIFFER: Just one more thing. If he wants
to go through the elements that are relevant in Perú, I
have no problem with that. But the control, that's a hot
button. That is not part of the Peruvian law, and that is
very much at issue in the United States.

PRESIDENT SIMMA: Okay. I think we can now get
together and make a decision.

(Tribunal conferring.)

PRESIDENT SIMMA: We are going to take this out
of the room for a few minutes. We'll be back as soon as

[Page 265]

possible.

(Tribunal conferring outside the room.)

PRESIDENT SIMMA: My two colleagues are going to
explain our point of view on that matter. So, Chris, you
go first.

ARBITRATOR THOMAS: Speaking personally, the
issue of control as a question of U.S. law is not of
particular interest. However, it is the case that
Mr. Buckley had interactions with the other companies which
are either participating in this directly or not, and it is
a fair avenue of questioning to discuss his interactions
with those other entities insofar as it fell within his
area of responsibility. So, in principle, there
is -- there are a series of issues which arose on the facts
which is fair game for Counsel to pursue, but I would
suggest that it would be easier if we attempt to avoid any
trespassing on questions of control as it's understood
under the law of Missouri, which is, frankly, not of
particular interest, at least to me. I'm speaking entirely
on my own behalf.

ARBITRATOR GRIGERA NAÓN: And at the end of the
day, this is an issue of the scope of the Arbitration
Clause. It's a fair field that can be explored, so I think
that those questions are proper.

PRESIDENT SIMMA: And my question to you,

[Page 266]

Mr. Schiffer, is, do you want us to go into private
session?

MR. SCHIFFER: No. I mean, if the questions are
aimed at what your Co-arbitrators have said, then I have no
problem with those questions. What triggered me was this
sort of, you're -- you know the world is watching this and,
you know -- and then getting to the Missouri Litigation
elements, which is exactly what that was. So if he stays
away from that and asks questions that are relevant to this
case about -- just like you said, we have no problem with
that and never did.

PRESIDENT SIMMA: Okay.

(Comments off microphone.)

PRESIDENT SIMMA: Okay. So we stay in the
public.

MR. SCHIFFER: I mean, I may change my mind as
the questions continue, but I'll make my objection. Thank
you.

PRESIDENT SIMMA: Okay.

Mr. Vaca, you are back. The floor is yours,
again.

(Comments off microphone.)

PRESIDENT SIMMA: That's a good idea. Yeah. Can
we get Mr. Buckley back?

SECRETARY DOE: In a few seconds.

[Page 267]

PRESIDENT SIMMA: So as soon as he is ready, we
are ready.

SECRETARY DOE: Mr. Buckley, we can hear you, but
we can't see you right now. I think you've got a prompt on
your screen. Yeah. Great, we can see you as well.

PRESIDENT SIMMA: Can you say a few words,
Mr. Buckley? Can you hear us?

THE WITNESS: I can see you.

PRESIDENT SIMMA: Okay. Fine. All right. So we
are back in business, and Mr. Vaca will ask you the next
question.

MR. VACA: Thank you, Mr. President.

BY MR. VACA:

Q. Mr. Buckley, I just have a few questions. While
you were President and General Manager of Doe Run Perú,
would you say that Doe Run Perú complied with its
obligations under the Stock Transfer Agreement?

A. I don't recall all the Stock Transfer Agreement.
I really don't. I am sorry. I can't answer that question.
I don't know.

Q. That's okay, Mr. Buckley. We can move to the
next question.

Just regarding day-to-day operations of Doe Run
Perú, while you were President of Doe Run Perú, neither
Renco nor Doe Run Resources ever managed those day-to-day

[Page 268]

operations -- right? -- of Doe Run Perú?

A. No. They did not.

Q. And while you were President of Doe Run Perú, did
you consider Doe Run Perú an independent company?

MR. SCHIFFER: I'm sorry, I mean, it's almost
like he wasn't listening to what the directive was. I
mean, none of this is related to our theory of an indirect
Party. The elements are clear, and this all goes to the
issue of piercing the corporate veil in the U.S. These are
all questions under Missouri law.

PRESIDENT SIMMA: Without knowing what the next
question will be, but then Mr. Buckley will have to be
secluded -- excluded again. Then we can decide whether it
really aims at this. So Mr. -- how can we kind of get
Mr. Buckley --

SECRETARY DOE: Mr. Buckley, we're going to put
you, once again, in that breakout room there for a few
minutes while we sort this out.

There. I believe he's in the breakout room.

PRESIDENT SIMMA: Will you go into the direction
that Mr. Schiffer does not want you to move, or what is the
direction away from the control issue here?

MR. VACA: Absolutely not, Mr. President. We
just have one more question and it relates to compliance
with its obligations, to Doe Run Perú's compliance with its

[Page 269]

obligations.

PRESIDENT SIMMA: Could we have that question?

ARBITRATOR GRIGERA NAÓN: Why not?

PRESIDENT SIMMA: Could we hear it.

MR. VACA: Absolutely. Yeah. The question is,
did Claimants, The Renco Group, and Doe Run Resources, ever
step in to comply with Doe Run Perú's obligations in its
place while he was President.

MR. SCHIFFER: I have no problem with that
question. It doesn't make any sense to me, but, sure, have
at it.

PRESIDENT SIMMA: Okay. They say that movement
and mobility is important, so let's hope that the Witness
shares that view.

Can we get him back.

(Comments off microphone.)

PRESIDENT SIMMA: So the question of the
independent from Renco is not going to be repeated here.

(Comments off microphone.)

MR. VACA: If it's okay, Mr. President, I'll
answer your question. We won't ask the question again.

It's already answered and in the record.

PRESIDENT SIMMA: Okay.

MR. VACA: Thank you.

PRESIDENT SIMMA: While we are waiting, a

[Page 270]

question to Transcript, because this is very tactful, you
say "comments off microphone." Just yesterday, I spilled
my coffee over my beautiful suit, and I might have -- I
don't know whether I was quite explicative or not,
but -- did you take that out of the record?

(Comments off microphone.)

PRESIDENT SIMMA: So, Mr. Buckley, are you ready
for the next question?

THE WITNESS: I am. Thank you.

PRESIDENT SIMMA: Mr. Vaca.

MR. VACA: Thank you, Mr. President.

BY MR. VACA:

Q. Welcome back, Mr. Buckley. I just have one more
question. While you were President of Doe Run Perú, did
The Renco Group or Doe Run Resources ever step in to comply
with Doe Run Perú's obligations in Perú?

A. If you mean to directly step in, no, they never
did.

Q. Thank you so much for your time, Mr. Buckley.

MR. VACA: Members of the Tribunal, those are all
the questions that I have. Now my colleague, Gaela Gehring
Flores will continue with some additional questions for
Mr. Buckley.

PRESIDENT SIMMA: Yes. I'm sure I caught the
name correctly, but whoever is mentioned has the floor now.

[Page 271]

Oh, it's you. Okay. Gaela. Gaela. Yeah. Okay.

Ms. Gehring, you have the floor.

MS. GEHRING FLORES: Thank you, Judge Simma.

BY MS. GEHRING FLORES:

Q. Hello, Mr. Buckley.

Can you see me?

A. I can see you fine.

Q. I'm going to ask you some questions dealing with
Doe Run Perú's sulfur dioxide emissions reporting during
the time that you were General Manager and President of Doe
Run Perú.

A. Okay.

Q. Mr. Buckley, you were General Manager and
President of Doe Run Perú until September 2003; correct?

A. Yes.

Q. In your Witness Statement at Paragraph 10, you
say that the La Oroya Complex was in such bad shape from a
maintenance point of view that just fixing some things cut
down the pollution by 20 percent.

Is that your understanding?

A. If that's what I wrote, that's what my
understanding would be.

Q. And Doe Run Perú, while you were General Manager
and President, had a system for measuring sulfur dioxide
emissions from the main stack; is that correct?

[Page 272]

A. Yes, we must -- yes, we did. I'm trying to
remember back. It's a long, long time ago.

Q. Understood. And Doe Run Perú would report the
results of those sulfur dioxide measurements of the main
stack to the MEM; correct?

A. We reported all sorts of things to MEM. I have
no doubt that it was one of them.

Q. Do you have any reason to think that you didn't
report your sulfur dioxide emissions?

A. No. No. No. No.

Q. Okay.

A. No. No. No. No. I'm sure we did it.

Q. Okay. And do you recall you also reported your
progress on emissions reductions to the La Oroya community.

Do you remember that?

A. Well, yes, Dr. Huyhua would do that on a regular
basis.

Q. And I think, in 2002, toward the end of your
tenure as General Manager and President, you submitted a
rather large report to the La Oroya community. I'm going
to pull it up on the screen for you.

Could we pull up Exhibit C-47 from the Treaty
case. And just the -- yeah.

Do you see that on your screen, Mr. Buckley?

A. Yeah, what we did -- we did a lot of

[Page 273]

communication with the communities, yeah. You know, we
tried very hard to communicate to the communities what we
were doing. I see this. I'm sure, you know, we did it,
yeah.

Q. And you happen to figure quite prominently in
this particular Report. Could you go to Page 7, PDF Page 7
of 302.

Is that you, Mr. Buckley?

A. A very young me, yes.

Q. And I think, in this Report, this may have been
your last Report to the community because I believe in this
Report you were explaining that Mr. Neil was about to come
in as General Manager of Doe Run Perú.

Do you remember that?

A. Okay. No, I don't remember this, not with any
detail. No way. I know we did communications and I don't
remember this at all.

Q. Could we go to Page 10 of 302.

Here, we have a chart or a table that is
reporting to the La Oroya community on a number of things,
and my colleague, Kelby Ballena, had highlighted the row on
sulfur released.

Is that -- would that be a way that you were
reporting to the community about your emissions progress?

A. Well, what would happen is, you know, Dr. Huyhua

[Page 274]

and his people would put together this information, and
that would be part of the Report, and I would see it before
it was published, obviously, but I -- yeah, there is no
reason to think other than this is the information we would
have given the community, certainly by the looks of it.

Q. And, Mr. Buckley, with all of your experience as
a metallurgist, I imagine you're quite familiar with the
concept of "mass balancing"; is that right?

A. I'm sorry? Say it again.

Q. Mass balancing?

A. Oh, yeah. Yeah.

Q. And am I correct that mass balancing is something
that you do from Day 1 in metallurgy school?

A. Well, I'm not sure we did it at La Oroya, to tell
you the truth. I don't remember. I'm sorry. I don't
remember.

Q. I'm going to show you -- but you do know how to
do mass balancing, Mr. Buckley; correct?

A. Yes.

Q. Now, I'm going to show you Exhibit R-314.

Yeah, English please.

So this is a report that Counsel for Renco and
DRRC recently admitted onto the record. We call it the
"SVS Report." It happens to be dated June 2003, and I'm
not sure if you recall the Report itself.

[Page 275]

A. No, I don't.

Q. Excuse me. Actually, the actual SVS Report in
Spanish. Yeah.

Excuse me, we had the wrong document on the
screen. Okay.

So here, it is a report done by SVS Ingenieros
and Golder Associates, and it's a report that was issued in
June 2003. And the lawyers for Renco and DRRC in this
proceeding have submitted that this Report has something to
do with DRP's sulfur dioxide emissions reporting at the
time, when you were General Manager and President.

So I'd like to go to Annex 3 of this Report.
We'll get there. Okay. So here is Annex 3, and in Spanish
it says, "Balance Anual de Azufre," which, I represent to
you, means "annual sulfur balance."

Mr. Buckley, like we established, you are
familiar with the concept of mass balancing; correct?

A. Correct.

Q. And presumably, this Annex is establishing that
it is an exercise in balancing a particular element,
sulfur; is that right?

A. Correct.

Q. And mass balancing is important in metallurgy and
in metallurgical operations to check for the efficiency of
the Facility and for metal recoveries; right?

[Page 276]

A. Yes, it is.

Q. Because mass balancing allows you to account for
the metals and other substances that you might be losing in
your process; is that right?

A. Recovery calculations, yes.

Q. And if you're losing metals, then that could be
costly for your operations; is that correct?

A. Yes.

Q. You might be throwing money out the window?

A. Could be.

Q. And for that reason, I imagine, at Doe Run Perú,
you would have your staff doing mass balancing on a
relatively constant basis; is that true?

A. Well, they would be doing calculations on the
recovery of metals. Remember, this was a polymetallic
operation, so there was multiple metals and materials
involved. So, yeah, there would be ongoing calculations on
recovery of all the various metals. Now, whether you would
call it a "mass balance" every time, I'm not sure you would
do that. But, yes, they constantly are looking at
recoveries of the various metals in a very complex
polymetallic operation.

Q. Is there something else that you -- sorry. Go
ahead.

A. I'm sorry. I should -- go ahead.

[Page 277]

Q. No, I just wondered -- is there something else
that you would call it when you're trying to account for
your inputs and outputs?

Would you call it something else other than "mass
balancing"?

A. Well, yeah. You know, we -- the term "mass
balancing" was not used. I know what the concept is, but
we didn't use mass balance on every metal or every
substance. We would calculate the recovery from what goes
in and comes out.

Q. Okay.

A. Now, this would be done by a metallurgist at
La Oroya, and these would be reported to Dr. Huyhua, and he
would be reporting to me and to other senior people once a
month for reports on -- you know, he would not report
every, you know, month on recoveries. Really, that would
only be a recovery when it was outside the norm. Remember,
there's been a plant there in La Oroya since the '30s. So
there was a lot of background information that they could
compare with. So -- but to say mass balance, that would
not be a term that would be widely used.

Q. Okay.

A. "Metal recoveries" would be the term that would
be used, or, as you put on the screen, sulfur --

Q. Okay.

[Page 278]

A. -- recovery.

Q. And if you were doing a sulfur balance or a
sulfur recovery calculation, you might be doing that for
emissions standards reasons; right?

A. Yeah. I mean, they would be -- it's normal in
any smelting operation to have what's called "stack
testing." That is when you actually go up the stack and
you actually measure what is going out the stack.

Now, I don't recall how often that would be done
at La Oroya, but we would be able to calculate how much
sulfur was going into the Plant and we would be able to
estimate, you know, what sulfur was leaving the Plant,
certainly, through the stack.

Q. So if one reason to do a sulfur or a metals
balance or a metal recoveries balance might be to check
your profit margins, another reason might be to check your
emissions levels; is that right?

A. No. That's not right. When we bought
concentrates -- let me rephrase that. When we bought
concentrates, as I said, this is a polymetallic material
containing various metals. The purchase of those
concentrates relates to the recovery of each of the
particular metals of which there will be multiple. It is
those recoveries that have to be followed because that
impacts on what we pay for the concentrates and the

[Page 279]

recovery.

The Business Plan for La Oroya was that there
would be these multiple metals, and we would be saying a
recovery of 75 percent, but we would be hopefully able to
do 80 or more than 75, and that becomes free metal to the
Company. So those are the calculations you have to do
and -- so that you know the complications.

Q. Mr. Buckley, if I could just stop you there
because I just want to go back to the -- my emissions
question. And I just want to clarify.

So is it your testimony that you would never do a
mass balance calculation in order to check --

A. I didn't say that.

Q. -- in order to check, verify your emissions
level?

A. Those would be verified towards the end of my
term, so to speak. There was -- we were particularly
interested in sulfur dioxide because we had a consultant
company working on the design of an acid plant for the
sulfur dioxide, and we need to know how much dioxide there
was and what was the strength because the strength decides
how and how you build a Sulfuric Acid Plant. So, yes,
there would be mass balances done. I'm sure the
consultants did that because they would probably need that
information and input in terms of designing the Acid Plant.

[Page 280]

But to ask me if I saw the mass balances done,
no, I would not. Dr. Huyhua would, and the consultants
building the Acid Plant would. But to ask me, personally,
did I do mass balances, the answer is no. I don't know. I
wasn't running La Oroya, per se.

Q. So Mr. Huyhua would be doing mass balancing for
emissions purposes then; is that right?

A. You're asking me about 27 years ago.

Q. Someone --

A. To ask me that kind of detail.

Q. Someone was doing it.

A. I've got to be honest with you; I really don't
remember who would be doing it, but I am sure they were
done. They would be done as a routine. I mean, I would
not be saying to them: "Have you done mass balancing this
week or next week?" No.

I mean, it would be -- if it is considered part
of running the operation, then it would be necessary and
they would do it. But to say they would do it all the
time, no. No, that's not correct.

Q. Maybe one reason you would want to do it
consistently would be to alert the La Oroya community in
case you had an unexpected release of sulfur dioxide?

Would you do it for that reason?

A. No.

[Page 281]

Q. No?

A. No. No. Let me answer that question.

Q. Okay.

A. Dr. Huyhua was-- we did have monitors for sulfur
dioxide in the town, and if you've been to La Oroya, you
will know that it's at 12,000 feet, and it lies in a vault
between two mountains or a circle of mountains. And in
certain weather conditions you get an inversion, and the
sulfur dioxide comes down into the town.

What Dr. Huyhua did -- I thought it was quite
brilliant, frankly. He hooked in the monitors into a
weather prediction situation, I will call it, and when the
gas would come down into the town, we shut down various
parts of the operation to -- so it would not be an impact
on the town until that inversion lifted and we were able to
go back to normal operations.

That is how we were handling sulfur dioxide
during my time.

Q. So you -- DRP, during your tenure as General
Manager and President, was concerned with sulfur dioxide
emissions and the effect on the La Oroya community?

A. Yes.

Q. Okay. Let's go to Annex 3 of the SVS Report,
R-314. Right. And let's go to -- let's flip two pages
down. Okay.

[Page 282]

So I'm at Page -- PDF Page 150 of R-314, and,
again, this is in the sulfur balance, the Annual Sulfur
Balance. Here we've got years 2000, 2001, and 2002.

Do you recognize this as a sulfur balance,
Mr. Buckley?

A. Well, you know, it certainly looks like one.

Q. Okay. And I'd like to --

A. Yeah. I mean, yeah, I can see. It's a sulfur
balance, and we were totally aware of problems with sulfur
dioxide, and that is why we hired consultants very much
when straight after we took over La Oroya and we put them
to work on looking at building acid plants to deal with the
sulfur issue. I mean, we brought them on board, basically,
right out of the blocks.

So we knew there was a sulfur -- I mean, you keep
asking me, but I'm telling you that we absolutely knew
there was a sulfur dioxide problem and resolved to solve
it, and that was part of the PAMA.

Q. I think it's maybe about seven rows down. In
Spanish, it says "SO2 al ambiente, metric tons per day," so
sulfur dioxide to the environment, metric tons per day.

Could you highlight that, Kelby, please.

We'll get it done so you can see what numbers I'm
focusing on in that row. So it's the --

A. I cannot see.

[Page 283]

Q. Yeah, we're going to get it bigger. Okay. There we go.

So there's the part of the screen that says "SO2 al ambiente."

You can get rid of that and then just highlight that row. There you go.

A. I see it. I see it.

Q. Okay. And then I'd like to focus on the last two columns of this sulfur balance.

A. Okay.

Q. The first of the last two says "SO2, al ambiente," so sulfur dioxide to the environment, "pruebas de control". I understand that to mean "you're sampling." That's what you measured in the main stack. And then --

(Overlapping speakers.)

A. You're asking me details I don't -- I can't remember or -- I mean, I don't recall seeing this document. I mean, we know we had an issue with sulfur dioxide. We were trying to solve --

Q. I'm actually not asking that question, Mr. Buckley. I'm just going to ask you some things --

A. I don't know what question you're asking.

Q. I will get to it, I promise.

A. I don't know what question.

Q. Okay. So, in the last column, it says: "Sulfur

[Page 284]

dioxide to the environment calculated."

Would you assume if you're doing a sulfur dioxide -- sorry, sulfur balance, that last calculated number is from a mass balance?

Just in your experience in metallurgy, that last number would be calculated from a mass balance as opposed to measured in the main stack?

A. You know, I don't remember this Report, but it is possible. I won't go any further than that.

Q. Okay. And I think we can see that the SO2 associated with the calculated amount, with the mass balanced amount, that is 99.6. That is actually 95 percent of the number that is in the third-from-the-last column, which is 1,041.7.

And do you understand, Mr. Buckley, that, as a general matter, DRP assumed that 95 percent of the sulfur dioxide in the facility was going out the main stack?

A. Well, that's -- I mean, I find that high, seeing as we already were collecting sulfur dioxide to feed the acid plant -- the acid plant, but if that's the numbers, that's the numbers.

Q. Okay. So when DRP would report sulfur dioxide emissions numbers to the MEM, do you know if -- do you know that DRP would report them on an annual basis, so metric tons per year?

[Page 285]

A. I don't remember.

Q. Okay.

A. I'm sure we did, but I don't remember.

Q. I can show you a document in a moment that will show you that they did.

A. Okay. If you say they did, they did. I'm sure we did, but I don't remember.

Q. And I'm basically going to compare what you reported to these calculations. So in order --

Mr. Buckley, in order to turn those figures, which are per-day figures, into annual figures, I'm just going to multiply both of them by 365, the number of days in the year. And I'm just blowing this up so you can see it better.

Okay.

A. Can I comment?

Q. 878 times 365 equals 320,470 metric tons a year, and 989.6 times 365 is 361,204 metric tons per year.

So I'm just showing you that I'm getting an annual number as opposed to a daily number.

Do you see that?

A. I see that. You're coming up with these numbers. There is no way, you know, I can remember this report, and let me just point something out.

You seem to be assuming that I personally sent

[Page 286]

this information to MEM. This was accomplished by the environmental people -- I can name them -- that would give these reports to MEM, but I would not be, as President and General Manager, responsible for issuing these kinds of reports to MEM. This would be done by our environmental people.

So you're talking about reports which I may well have seen, but I don't remember, but the reports would go directly from, let's say, from our environmental people directly to MEM, and they would be discussions there.

Q. Understood. But, Mr. Buckley, I just -- one more question about these.

Do you know if Doe Run Perú was reporting to the MEM its mass balancing calculations of sulfur dioxide, or what was being measured at the main stack?

Are you aware?

A. I haven't got the slightest idea.

Q. Okay. Let me ask you, maybe, a more simple question. The mass balancing number, the calculated number to the far right, that's larger than the measured number; correct?

A. That's what you're showing.

Q. Yeah. About 41,000 tons larger.

And I understand that you don't remember this report. I'm asking you about this report because the

[Page 287]

lawyers for Renco and DRRC have represented that, starting around 1999, Doe Run Perú started reporting to the MEM the mass balancing number and not -- not the number that was coming out of the sampling of the main stack.

Do you know anything about that?

A. I don't recall. I really don't recall.

Q. Okay. Well, we can go look and see in another document what was reported, but if you had a choice between these two numbers, which one -- as President and General Manager -- which one would you report to the MEM?

The larger number or the smaller number?

A. Both.

Q. Sorry? I didn't hear you. Both. Okay.

A. Both numbers.

Q. Okay. Let's go to Exhibit 11 from Wim Dobbelaere's Report, Appendix B, Page 39, which I can represent to you is a very, very tiny, tiny table. Well, not tiny, but it has tiny, tiny numbers on it. We'll blow it up in just a moment.

And these are sulfur dioxide figures that Doe Run Perú reported annually to the MEM. And you'll see in the row for the year 2000, all the way to the right, is 317,465 metric tons of sulfur dioxide.

Do you see that, Mr. Buckley?

A. Yes.

[Page 288]

Q. And if you -- if we take that figure and we look at the calculated figure and the measured figure in the -- in Annex 3 of the SVS Report, it would look like Doe Run Perú is reporting the smaller number, the number that was measured at the main stack; is that right?

MR. SCHIFFER: Can I have a clarification?

Because it looks like the time periods are different. One is from October 23, 1997, and I'm not even sure what time period you're referencing on the table.

MS. GEHRING FLORES: Well, both are -- one is a document that is reporting all of Doe Run Perú's sulfur dioxide annual reporting for the year 2000.

MR. SCHIFFER: How do you know that?

MS. GEHRING FLORES: Because that's what the document is. And we could -- we could have -- if you wish, we could break and you can look at the document. It has been in the record for quite some time.

MR. SCHIFFER: Yeah, I'm looking at the document, and I don't think they match. Go ahead.

MS. GEHRING FLORES: Okay.

BY MS. GEHRING FLORES:

Q. But it does look like, in the year 2000, Doe Run Perú reported a number that is certainly closer to the smaller number. 317,000 is closer to 320,000; is that correct? Mr. Buckley?

[Page 289]

A. Oh, you're talking to me. I didn't know who you were talking to.

Q. Yes. Yes. Sorry. Yes.

A. Yeah, I mean, it is less than that and close to that number. Okay.

Q. And maybe, just to spare you the exercise so that we don't have to do this for every year, just -- can you take a guess -- can you take a guess -- Mr. Buckley, can you take a guess at the other years of 2001 and 2002 if Doe Run had a choice between reporting the smaller number or the larger number?

Which one did they report?

A. Well, they looked very much like they took with the lower number.

Q. Okay. Yes. Yes. And I can --

A. You asked me -- you asked me what I would publish. You should know that these reports, I did not personally go through these reports to do them. I mean, that was not something I would do. That would be left with the environmental people and would be led in those years by Giko Poppimorioco (phonetic.)

I did not personally send these reports myself after viewing them. They were done by my environmental personnel. That is just the way it was, rightly or wrongly.

[Page 290]

Q. Okay. So rightly or wrongly, and -- again, Mr. Buckley, so I don't have to drag you through all the numbers, I'll represent to you -- and we can show it up on the screen, that in each a --

A. I'm sure you're right.

Q. -- that in the next year. We can just do it so people can see it. So there is 2001 -- and there is 2002.

A. Okay.

Q. Okay. And --

A. All right. You have made your point. Okay?

PRESIDENT SIMMA: Mr. Buckley. I'm sorry. I'm sorry for interrupting you, but we have to have a transcript. And that will be impossible if what you are saying overlaps. So would both Ms. Gehring and you, just wait until the other person is finished so we have a clear distinction and can say who said what. Thank you.

THE WITNESS: Okay.

BY MS. GEHRING FLORES:

Q. Thank you, Mr. Buckley. Did you want to finish?

A. No. I'm done.

Q. Now, I do understand that you had other staff who may have been reporting these numbers, and maybe there was just some confusion on the part of Renco and DRRC's lawyers with respect to what numbers were being reported, but I did want to take you back to that -- the report that you were

[Page 291]

in, in 2002. It is Exhibit C-47 from the Treaty case.

Let's go back to Page 7 of 302. Sorry. And now Page 10 of 302.

And going back to that second-to-last row called "Sulfur Released," and in that row, I assume you're reporting the amount of sulfur that is leaving the La Oroya Facility since 1997, 1997-2002.

Is that what you understand that to be?

A. Yes.

Q. Now, Mr. Buckley, sulfur itself is a solid at room temperature.

Am I right on that?

A. Yes.

Q. Would sulfur leave the La Oroya facility in solid form?

A. No. This would be in SO2, sulfur dioxide, but calculated as sulfur.

Q. And I've learned quite a bit about chemistry and metallurgy over the past couple of years. I certainly don't know as much as you do, but if you take sulfur, a number, you know, let's just say one sulfur and that sulfur binds to two oxygens, that becomes sulfur dioxide; right?

A. Correct.

Q. Do you know what the molecular or atomic weight of sulfur dioxide is, as opposed to sulfur?

[Page 292]

A. I have forgotten all that I did so many years ago. I'd have to look it up.

Q. Can I represent to you that it is just multiplied by 2?

A. I beg your pardon?

Q. That you just multiply by 2? To go from sulfur to sulfur dioxide, the molecular weight is multiplied by 2?

A. You're probably right. I just don't actually remember.

Q. Okay. Just for the record, the atomic weight of sulfur is 32. The atomic weight of oxygen is 16.

A. Okay.

Q. So if you combine one sulfur with two oxygens, you've got 32 plus 32, which would equal 64, just doubling the weight?

A. Okay. All right.

Q. So first I just want to multiply -- and I'm focusing on the years 2000, 2001, 2002. I'm just multiplying those by 2 because this is saying "sulfur released." It is not saying "sulfur dioxide released"; right?

A. Correct.

Q. Okay. So let's multiply by 2 and figure out what the sulfur dioxide release might be. Those are those figures. And using DRP's own mass balancing estimates of

[Page 293]

what's leaving the main stack, I'm now going to multiply that or take 95 percent of those figures. And there you get a result. And let's look at the year 2000, which is 361,203.

And now I'd like to compare that to Annex 3 of the SVS Report in the year 2000. So it would seem in the year 2000, in this Report that DRP sent out to the community about sulfur leaving the Facility, which you would need to convert to sulfur dioxide, because, as we discussed, sulfur doesn't leave the Facility in powder form. It leaves it in sulfur dioxide form. So converted it to sulfur dioxide, and that number, 361,203, looks very close to what was in the SVS Report for the mass balanced calculation of 361,204; is that right?

A. It would appear so.

Q. Right. So in the year 2000 -- and, again, these mass balance numbers, these sulfur balanced numbers come from DRP. This is from your Report to the community. So DRP, it looks like, was definitely doing its own sulfur balance calculation.

Now, Mr. Buckley, if you -- as President and General Manager of DRP -- if you saw in the year 2000 is that there was a 41,000-metric-ton discrepancy between what you were measuring at the main stack, what you thought was coming out of the main stack, and the mass balance

[Page 294]

calculation, you would be concerned; right?

A. Well, I certainly don't remember seeing those numbers.

Q. But if you had, if you had seen them, you would be concerned; right?

A. Well, I would be asking questions about the calculations.

Q. If the calculations were correct, would you have to assume that you were emitting 41,000 metric tons of fugitive emissions?

A. I would most certainly be asking questions why was the discrepancy, yes.

Q. But as a metallurgist, if the calculations were correct, would you have to assume that you have over 40,000 metric tons of fugitive emissions?

A. I would most certainly have to give it consideration. That's for sure.

Q. Right. Because those 41 -- those 41,000 metric tons are going somewhere. They can't disappear. That's the whole point of a mass balance; right?

A. That is correct.

Q. And if you have that level, you know, 41,000 metric tons of fugitive emissions leaving the plant, that would be concerning because fugitive emissions are particularly toxic to the La Oroya community; correct?

[Page 295]

A. It would be a concern, that's correct.

MS. GEHRING FLORES: No further questions.

PRESIDENT SIMMA: Thank you very much, Ms. Gehring Flores. Can I give the floor to -- actually, would that be a good time for the coffee break, which is overdue anyway?

MR. SCHIFFER: Yeah.

PRESIDENT SIMMA: So we'll have a coffee break until 3:35, with the usual admonition.

(Comments off microphone.)

PRESIDENT SIMMA: We are going to meet again at 3:45. That is where I was. 15:45.

MR. PEARSALL: Before we break and after the witness is excused, we have just one housekeeping matter to put on the record with the President's indulgence. So once the witness is excused.

PRESIDENT SIMMA: Oh, without Mr. --

SECRETARY DOE: He's already in the waiting room.

MR. PEARSALL: Thank you. So I'm sure that this was not my colleague's intention, but sometimes having a detailed explanation for the basis of an objection can signal to a witness how they should adjust their testimony.

And, again, I'm sure that is not Mr. Schiffer's intention, but he did it several times, and I think we got where we needed to in the end.

[Page 296]

But just going forward, I think it would be best, if we are going to have a lengthy objection, that the witness be excused or protected from hearing the explanation for the basis of that objection. And we will, of course, abide by the same rule.

PRESIDENT SIMMA: Okay. All right.

MR. SCHIFFER: First, I mean, you can tell Mr. Buckley doesn't -- you don't coach Mr. Buckley, but, fine. I mean, but I will try to do better, and that's all I can say. Yeah.

PRESIDENT SIMMA: Okay. Thank you.

Now, it is 45 sharp.

(Brief recess.)

PRESIDENT SIMMA: And a question or a point raised by Mr. Schiffer.

MR. SCHIFFER: Yeah, I just have a question about time, especially with Experts. If I save time with one Expert, could I use that time with another Expert? Because not all the Experts are created equally, and some will need more time than 45 minutes and some less time. And I don't -- I won't violate the overall time rules, but if we could, you know, borrow time from one and use it with another, that would be helpful. And obviously, I bring that up now; so the other side has the same opportunity.

PRESIDENT SIMMA: Can I have -- Mr. Pearsall, do

[Page 297]

you have a view on that?

MR. PEARSALL: Yes, so our understanding of the Procedural Order is that there's an overall chess clock, an overall clock of time, which we can use however we see fit in presenting our case, as long as we stay within the time limit set by the Tribunal.

Now, that's our understanding. If Mr. Schiffer is suggesting that he be permitted to do a presentation with his Expert or something along -- long like that, I think the Tribunal has already been aware of our objections to that, but as long as we're within the chess clock or the overall time that has been allotted to each side by the Tribunal, we're fine with however anyone wants to divide that time.

PRESIDENT SIMMA: Yeah, since you're the author of PO10, I guess, so you have the floor, sir.

SECRETARY DOE: Sure. I guess that's just the clarification, is this seeking to make exception to what is the 45-minute maximum for the direct examination or presentation of an expert, that is in Paragraph 9.4 of the Procedural Order, or is it more generally?

MR. SCHIFFER: It is, first of all, not to expand any time, even for Experts. But if I do one Expert, let's say, in 15 minutes, can I take the remainder of that time that otherwise I could spend with that Expert and use it

[Page 298]

with another Expert? Because not all the Experts are created equally. And some are actually more -- have to cover more ground than others.

SECRETARY DOE: So as I heard it, that falls into the overall concept of the chess clock that Mr. Pearsall has just set out, as long as it -- it isn't suggesting, then, we will have a presentation of an hour and 15 minutes in direct of a further Expert. As long as that's not what's in question, then, then I think it is, indeed, part of the chess clock that the time is used in whichever way either side wishes to use it.

MR. SCHIFFER: Yeah. I'm not making myself clear. So are you saying that even if I don't violate the overall -- I have 22.5 hours. And even if I stay well within that, I can't do one witness shorter and then add that time to another Expert?

SECRETARY DOE: I really think you're going to have to say, are you speaking specifically about direct examination, or are you talking about --

(Overlapping speakers.)

MR. SCHIFFER: Yes. Direct. Direct. So, I mean, I'll be -- I won't be coy. So, like, Dr. Schmerler, our bankruptcy Expert, he really is a single-issue Expert, everything he said is in the record. I don't need to spend 45 minutes with him, but Mr. Connor, who covers a very, you

[Page 299]

know, critical environmental issues, he'll be hard pressed to present what we want to present on direct in 45 minutes.

And so I would -- you know, even in an hour with him would be helpful. And I'm not saying that I'm going to go over -- I'm just borrowing time from one Expert, and trying to use it with the other. That's all I'm saying.

SECRETARY DOE: I mean, I think that's a question for the Tribunal and, perhaps, for Respondent.

MR. PEARSALL: Yes. We -- I mean, with respect, I'm sorry that Mr. Connor will be hard-pressed, but the Tribunal should not alter its Procedural Order, which is very clear and negotiated, and subject to a significant correspondence between the Parties at 9.4, where it says no direct examination shall exceed 45 minutes.

MS. GEHRING FLORES: And if I might add, Claimant has already attempted to go over the 45 minutes with their Experts with their letters to the Tribunal when they submitted the SVS Report. So this is just a second attempt to breach that rule.

MR. SCHIFFER: The 45 minutes -- I don't recall that ever being negotiated. I recall that was just what the Procedural Order says, and I've already said everything else, but I don't understand this over 45 minutes because we submitted a letter. But ...

PRESIDENT SIMMA: It's in PO10. And Parties have

[Page 300]

agreed to that, and I think that's the end of the matter; right?

(Comments off microphone.)

PRESIDENT SIMMA: Yeah. Okay. Can we, then, resume?

MR. SCHIFFER: Yes.

PRESIDENT SIMMA: Okay. Would Mr. -- can Mr. Buckley be called back, please.

Welcome back, Mr. Buckley. Let's see if you -- do you hear us? Do you hear me?

THE WITNESS: I can hear you fine.

PRESIDENT SIMMA: Oh, and we hear you. Fine.

(Overlapping speakers.)

PRESIDENT SIMMA: So I give the floor to Mr. Schiffer for the redirect.

MR. SCHIFFER: We have no redirect.

PRESIDENT SIMMA: You have no redirect?

MR. SCHIFFER: We have no further questions of this Witness.

PRESIDENT SIMMA: That probably means that you are not going to have any further questions either; is that correct?

MR. VACA: That's correct, Mr. President.

PRESIDENT SIMMA: So question to my colleagues?

ARBITRATOR GRIGERA NAÓN: No.

[Page 301]

ARBITRATOR THOMAS: No.

PRESIDENT SIMMA: No questions.

Mr. Buckley, that means that your examination has come to an end. Thank you very much for making you available, and have a nice -- I don't precisely know where you are, if you are --

THE WITNESS: South Carolina, sir.

South Carolina, sir.

PRESIDENT SIMMA: Oh, South Carolina. Okay. So have a great evening. Thank you very much.

THE WITNESS: Thank you. Thank you.

(Witness steps down.)

PRESIDENT SIMMA: Okay. That means -- sorry, you want to say something? That means that we have one hour, a bit more than one hour left, which is a lot of time. So we should, I think, proceed and start the examination of Mr. Juan Felipe Guillermo Isasi Cayo.

SECRETARY DOE: Mr. Isasi Cayo is in the waiting room; so we can already bring him in and see if can get started right away.

(Comments off microphone.)

JUAN FELIPE GUILLERMO ISASI CAYO,

RESPONDENT'S WITNESS, CALLED

SECRETARY DOE: And he will be testifying in Spanish, as I understand it; so ...

[Page 302]

PRESIDENT SIMMA: Okay. Good morning, Mr. Isasi Cayo. Can you hear us?

THE WITNESS: Yes, I can.

PRESIDENT SIMMA: Good morning, rather, good afternoon here.

THE WITNESS: Good afternoon, sir.

(Comments off microphone.)

MR. PEARSALL: Yes, Mr. President.

PRESIDENT SIMMA: Interpretation ready?

Transcript ready?

MR. PEARSALL: My associate, Augustina Álvarez Olaizola, will present in Spanish.

PRESIDENT SIMMA: Oh, it's going to be -- it will be in Spanish?

MR. PEARSALL: Sí.

PRESIDENT SIMMA: Can we have the -- can I -- the channel. The --

THE WITNESS: Good afternoon Mr. President.

THE INTERPRETER: Can you hear the Interpreters?

PRESIDENT SIMMA: I give the floor to Mr. Pearsall for the direct. Mr. Guillermo Isasi, welcome, thanks for appearing before us. You should have a Declaration in front of you. Would you please read slowly.

THE WITNESS: I solemnly declare, on my honor and conscience, that I shall speak the truth, the whole truth,

[Page 303]

and nothing but the truth. There is no person present in this room with me that is unauthorized, and I cannot communicate with any unauthorized person.

PRESIDENT SIMMA: Thank you very much, Mr. Isasi. Now --

THE WITNESS: I'm turning myself on off, sir. I'm turning myself on off.

PRESIDENT SIMMA: So who is going to do the --

MS. ÁLVAREZ OLAIZOLA: Me.

PRESIDENT SIMMA: And me is ...

MS. ÁLVAREZ OLAIZOLA: Augustina Álvarez Olaizola.

PRESIDENT SIMMA: Okay. So I give the floor to Dr. -- and you have the floor, Madam.

MS. ÁLVAREZ OLAIZOLA: Gracias. Thank you. Just a housekeeping matter before we conduct the direct examination. Mr. Isasi has a hearing problem; so I'm going to please ask everybody to speak very slowly; so that the translation is clear and it's slow for him as well. Also, Mr. Isasi at this time is in a room in the Lazo law firm offices, which is the law firm that represents Perú in Lima. There's nobody there in the room, but there may be a technological issue and there may be somebody there assisting him in that regard.

DIRECT EXAMINATION

[Page 304]

BY MS. ÁLVAREZ OLAIZOLA:

Q. Mr. Isasi, can you hear me?

A. Yes, I can hear you. Good afternoon.

Q. Good afternoon, sir. You have before you a copy of your Witness Statement?

A. Yes. I have a copy of my Witness Statement, and I also have a sheet of paper with the corrections that I need to make, because there are some substantial issues that I wanted to correct.

Q. Okay. I wanted to ask you if you had any kind of correction that you wanted to make of your Statement. And please proceed.

A. At Page 13, we find the first mistake. Excuse me. It is Page 8, Paragraph 13. At Footnote Number 13, at Page 8, like I said, reference is made there to Claimants' Exhibit -- rather, Respondents' Exhibit, which is the 2004 Decree 046. But the correct reference is to Article 6 and not to Article 2.1.2 and 2.4. Article 6.

The second mistake that I would like to correct is at Footnote Number 32 at Page 13. Reference is made there to R-216, Exhibit R-216. This is a letter from Doe Run to MEM of 24 December 2008, but the Exhibit Number is not R-216 but 192, R-192.

Q. Very well. Thank you, Mr. Isasi. I have no further questions.

[Page 305]

A. There is an additional mistake that I just noticed now, and I don't know whether there is in the English version, but in the Spanish version at Page 5, Paragraph 22, it reads the initial deadline was January 13, 2007. It is referring to PAMA, and it should say that the initial term expired on January 13; so that is understood from the context, but I don't know whether in the English version the mistake is there.

Q. No, we do not see the mistake in English. This is a typographical error, a clerical error in the Spanish version.

A. Thank you very much. I'm ready, then.

Q. Thank you.

PRESIDENT SIMMA: Pronounce your name relatively correctly without the phone. So thank you very much.

MS. ÁLVAREZ OLAIZOLA: It was perfectly well pronounced, and we have not received the documents from the other Party, as the document that will be used for the cross-examination of Mr. Isasi.

PRESIDENT SIMMA: Problem?

MR. SCHIFFER: No, not really. I can begin, and I don't know that I'll actually need to reference any documents. But we do have some that I have on standby; so ...

PRESIDENT SIMMA: All right.

[Page 306]

MS. ÁLVAREZ OLAIZOLA: Thank you very much.

PRESIDENT SIMMA: All right. So we start. Okay. The floor.

CROSS-EXAMINATION

BY MR. SCHIFFER:

Q. Good afternoon, Mr. Isasi.

You were a senior official at the MEM in the 2004-2006 time frame; correct?

A. 2004, July 2004 to 2007, I was the General Director of the Legal Department, and as of 2007 to May 2009, I was Mining Vice Minister.

Q. Okay. But you were -- as the Head of Legal, you were involved in the overall decision-making that the management -- senior management of MEM were taking at that time? That's a question.

A. Of course. Yes.

Q. Okay. You understood that in dealing with Doe Run Perú, that they asked for more time, beginning in 2004, to not only finish, design, and construction of the Sulfuric Acid Plants, but also to add 12 Projects to address fugitive emissions?

A. Yes.

Q. And it was clear to the MEM at that time that, given the necessary -- or the suggested redesign of the Sulfuric Acid Plants, that it was highly unlikely that Doe

[Page 307]

Run Perú would actually be able to complete everything under the PAMA, as it then existed, by the end of 2007?

A. In late 2007, January 13, 2007, that was the expiration for the PAMA.

Q. Right. And so you believed it was highly unlikely, given the information that Doe Run Perú gave you that they would be able to complete the PAMA by that date?

A. That was stated by Doe Run, requesting an extension that was not protected under the law. Law established that the term under Supreme Decree 016 was 10 years -- that is to say, it expired on January 13, 2007.

Q. Right. Exactly. And so the senior members of the MEM, of which you were one, were at a crossroads. You could either let them fail and close their facility, or you could grant an extension; correct?

A. That is correct. There was a dilemma, because the law would not allow us to grant an extension, given the reiterated breaches of Doe Run based in connection with the obligations that meant that they could not comply with the final deadline.

Therefore, the State was at this juncture, either the law was going to apply, this is, Supreme Decree 016, and there was going to be sanctioning period, and then they shut down of the Plant, of the Facility, and the La Oroya population would have been impacted because they were

[Page 308]

highly reliant on the economic dynamic created by Doe Run in La Oroya.

So -- or a new provision had to be passed and that was another possibility that was analyzed, but this would impact, also, the population in connection with allowing them some sort of continuity in terms of the pollution and the damage to the population.

Therefore, as part of that juncture, there was a consultation, a generalized consultation within the community and public opinion. There was a very strong opposition by environmental organizations, and the one Huancayo Archbishop, and, in general, the public opinion thought that Doe Run was a company that consistently breached their environmental obligations. Therefore, as part of that dialogue, we were at that juncture. We -- at some point in time --

Q. Excuse me, sir. Excuse me. I'm going to try to ask really simple questions, and if you -- if I could ask for your agreement to answer as simply as you can. Is that okay?

Do you agree to try to do that?

A. Agreed.

Q. Okay. My point -- the only point I'm trying to make right now is that the fate of Doe Run Perú was really up to the MEM in 2004 and 2005. You could either tell

[Page 309]

them, no, you don't get any extra time because the PAMA expires, and that's -- you won't finish what you need to do, or you could grant an extension once the law passed, for exceptional circumstances. Those were your options; right?

A. That is correct, but your question, or, rather, your suggestion that this was dependent on MEM. But before that it was dependent on Doe Run complying with their commitments in due course, and not having to face this juncture.

Q. Well, we'll get to that in just a minute, I promise. But the MEM would be the final decider of whether exceptional circumstances existed in order for Doe Run Perú to get an extension or not; true?

A. The MEM, the Ministry of Energy and Mines, not only MEM, but also by means of a dialogue, given the breach situation created by Doe Run, had to pass a special rule to avoid the closing, the shutting down of La Oroya. That is my answer.

Q. Yeah, but that's not my question, sir.

A. You are taking me to a question. You are inducing me to -- yes, I hear you. Okay. I listen to you.

Q. That's my -- yeah. That's -- so my question is different. My question is that, for example, when Doe Run Perú submitted their, in essence, application for all the

[Page 310]

reasons they needed an extension, the MEM could have said, no, you're not going to get that extension. They had that power. Is that true?

A. Of course. We were protected by the law.

Q. Right. Okay. So that's that question.

Now, in your Witness Statement, and as you're trying to say here, you believed at the time that Doe Run Perú had breached its obligations under the PAMA; right?

A. Exactly.

Q. That --

A. That was -- that was the version that we took from the relevant technical authorities, as a Legal Advisor that started to work in 2004, July 2004 in the Ministry of Energy and Mines had not checked those facts, but that was the information I received from the relevant technical officials with the Ministry.

Q. Right. I understand that you, yourself, didn't make first-hand judgments on whether Doe Run Perú complied or didn't comply, that you were getting information from the technical arm of the MEM. I understand that.

Did I say that correctly?

A. That is correct.

Q. Yes. Okay. So when it came time to put this to a vote of the MEM, did you personally advocate to grant the Extension or not to grant the Extension?

[Page 311]

A. I was a strong supporter of the Extension. I was a very strong supporter of the Extension against the environmental organizations that were clearly opposing the granting of an extension against the law, and I also tried to convince the Huancayo Archbishop who was a great leader of the opposition, those who opposed the Extension. I asked the Minister to call the Archbishop. He visited us. We explained the situation in which the country was, and he did not make any favorable or negative comment, but he listened attentively.

Q. Okay. I appreciate that.

So when the Extension was granted, you were aware that new deadlines were imposed on Doe Run Perú to finish the Sulfuric Acid Plants and to do the other Projects; right?

A. I don't think I understand the question.

Q. The 2006 Extension did exactly that; it extended the time in which Doe Run Perú could finish the Sulfuric Acid Plants that were in the PAMA; correct?

A. The specific -- yes, the Sulfuric Acid Plant was a very specific plant, but for that we needed to promote a dialogue nationally and also with the Congress of the Republic to persuade --

Q. I'm sorry. Mr. Isasi --

A. No, let me explain. Let me explain my point of

[Page 312]

view.

Q. Well, sir --

(Overlapping speakers.)

MR. SCHIFFER: I'm just asking a simple question, and, you know, I just asked him if it extended the deadlines. That's all I've asked him, and the answer, I think, is, "yes it did," or "I don't know," or "no, it didn't."

MS. ÁLVAREZ OLAIZOLA: Can you let the Witness finish the answer?

MR. SCHIFFER: Not when the Witness is going off on a tangent.

PRESIDENT SIMMA: Maybe the Witness could try to answer with "yes" or "no" to the question, and then continue and give his explanation.

MS. ÁLVAREZ OLAIZOLA: I think that that is what he was trying to do.

MR. SCHIFFER: Can I try my question again?

BY MR. SCHIFFER:

Q. Okay. My question is simply, did you understand that the 2006 Extension did just that; it extended the deadlines for DRP to complete the Sulfuric Acid Plants?

A. Yes, indeed, but, to that end, it was necessary to pass a new law -- that is, Decree 046 -- that had conditions, included or provided for conditions to grant

[Page 313]

that extension, and it was necessary to convince Congress and also public opinion as well as the La Oroya population for that.

Q. Right. But -- so -- and as head of Legal and being a lawyer, isn't it fair to say that all the things, that the technical people believed were breaches of the PAMA by Doe Run Perú prior to the Extension, were forgiven when they were given the right to continue building the Sulfuric Acid Plants within an extended time?

A. No, it did not constitute any form of forgiveness. It was just a moratorium granted on an exceptional and non-extendable basis. It was just granted for one time for the construction of the Sulfuric Acid Plants. Just for that. It did not imply an extension of the environmental obligations nor the PAMA obligations. In particular, the Ministerial Resolution granting the Extension states that. It also states that the Extension will not affect the Contract relationship that Doe Run had with Centromín and other actors because this is an independent area from the legal obligations.

Q. Well, the Extension applied only to the Sulfuric Acid Plants and the Fugitive Emissions Projects because everything else had been completed by then.

You understood that.

A. Based on Report 118, that was the basis for the

[Page 314]

approval of the Extension, the Ministerial Resolution, the specific project in -- also, in keeping with Decree 046, was the construction of three Sulfuric Acid Plants only. That was a very specific project.

Q. Right.

A. But, in addition to that -- in addition to that, Supreme Decree 046 and the Ministerial Resolution approving the Extension established certain conditions, certain supplementary and additional obligations that had to be met as an offset to neutralize the negative effect that the Extension had on the population for three years.

Q. Sir, we'll talk about what happened going forward. Right now, all I care about is looking backward in time.

So in 2006, when the MEM decided to grant the Extension, the reason no other projects were included is because they were completed.

A. The reason why no other project was included is that the Supreme Decree 046 left the possibility open for the administered party (Doe Run in this case) to take the initiative to request an extension for the Projects for their choosing. And they are the ones who requested the Extension solely for the Sulfuric Acid Plant, restructuring it from a single plant into three separate plants.

Q. Okay. Let me try it a different way.

[Page 315]

So the Extension only applied to Project number 1, which you understand, I'm sure, is the Sulfuric Acid Plants.

Is it your position that any other projects were in breach at that time?

A. I have not said that.

Q. Right.

A. I said that the Extension requested was for the Sulfuric Acid Plant and that the conditions to grant that extension were some additional complementary projects, among which, I understand based on Doe Run's request, was also to solve the issue of the fugitive emissions that had not been solved for many years now, as well as other health obligations--

Q. Sir, if I could ask a simple question. Okay. I mean, the simple question is: Is it or was it the MEM's position that any other project, other than Project 1, was in breach? Simply, that's my only question right now.

A. I cannot tell you by heart whether that was MEM's position. I am answering from what I remember, that the request was only in connection with the Sulfuric Acid Plants and that that Extension as suggested by Doe Run, also included fugitive emissions that had not been resolved, and also other conditions that had been imposed by the authority as a sort of neutralization of the

[Page 316]

negative effects, or the negative externalities, that the potential Extension was producing.

Q. Okay. I'm going to ask you a hypothetical question then. If Doe Run Perú were in breach of any other projects in 2006 other than Sulfuric Acid Plants, you would agree that the MEM would either have to shut down the Plant or decide to let them move on, because the Extension didn't apply to anything else; right?

A. That is not precisely what happened.

Q. Hypothetically, sir. Hypothetically. Okay? You said you don't know, so I'm asking hypothetically, as the Chief Lawyer for the MEM, if a breach occurs and an extension is not granted to give them more time, then your choice was to shut them down; right?

A. Your question is not accurate because your hypothesis is not telling me whether it is referring to a PAMA's obligation or a non-PAMA obligation.

Q. Okay. Fair enough. A PAMA -- I'm referring to a PAMA obligation. Okay. I'll clarify.

Hypothetically, if DRP was in breach of a project that was not extended and it was a PAMA Project that it was in breach of hypothetically, then the MEM's choice was to shut down the Plant under the PAMA law; correct?

A. Not necessarily. Supreme Decree 016 established some procedures and also there was a gradient for those

[Page 317]

sanctions depending on the breach. So based on the severity of the breach, some sanctions may have been imposed, and then grant some periods to bring the situation to where it was expected to be. And if it was severe, there could be a temporary suspension of the activities. And, finally, if the issue was severe enough, the Plant would be shut down.

But the Plant is not shut down in all of the breach cases.

Q. Right. And thank you for clarifying that.

So if a breach is considered to be minor, then you'll impose a fine; right?

A. Not myself. That would be the body that is in charge of the regulation.

Q. Right. But the MEM -- if the breach were considered by the MEM to be minor, they would issue a fine. Not you personally, but your organization.

A. No. The Ministry of Energy and Mines had the power to oversee up to specific point in time. After that, this jurisdiction was moved on to OSINERGMIN, that is separate from the Ministry of Energy and Mines, specifically to grant further security to mining investment so that the mining policy is not mixed with the control, supervision, and oversight of the mining companies.

Q. Okay. Well, in 2004, '05, and '06, and earlier,

[Page 318]

it was the MEM that was, in essence, calling the shots on La Oroya; right?

A. I understand, based on what I mentioned in my statement, in connection with the technical staff, that, indeed, while the Ministry of Energy and Mines was overseeing this, there were some breaches and there were some sanctions that were imposed and, in some cases, only some corrective measures and, in other cases, some extensions were granted within the terms under Decree 016.

Q. Okay. My question is really simply this -- okay. Very simple question -- if the MEM considered a breach to be minor, it would fine the Facility? And let's not even make it about Doe Run Perú. Let's just say anybody.

Generally speaking, if a breach is considered minor, then the MEM, or whatever body within the Government, would issue a fine.

True or false?

A. Yes, based on the severity of the breach.

Q. Right. So if -- and let's not make this about Doe Run Perú. Let's just make it about any smelter in Perú.

If the company paid the fine, then the matter was over, for that violation?

A. You are now asking me a legal question as an expert, but I am a witness based on my tenure at the

[Page 319]

Ministry. The Expert charges certain fees. The Witness, like me, works for free. So if you want to ask me something about a specific situation, I'll be happy to answer, but then I will be charging you the fees as an expert.

Q. Okay. Well, what's your rate?

You don't have to answer that.

A. $350 an hour.

Q. Okay. We'll see. We may get there.

I'm asking you based on your experience and being a Chief Legal Officer at the MEM. I'm not asking you to make any interpretation that you haven't considered before.

So my question is: Was it the MEM's policy that, once a minor breach occurred and a fine was issued and paid, that the matter was closed?

A. No, no. The matter is not closed. If the breach persists, you can impose a second fine. And if it continues to persist, then you can have a temporary cessation of activities, and then you can go even to a shutdown.

Q. Right.

A. That's why I'm saying you were putting a hypothetical to me. But it's quite a complex matter in accordance with the situation in each case.

Q. Okay. But now I'm going to bring it back to Doe

[Page 320]

Run Perú.

Did the MEM ever, before -- well, in 2006 -- really, did the MEM ever shut down Doe Run Perú? Did it ever take the action that it would take for severe breaches?

A. What year you said?

Q. Any year, until June 2009 when they stopped operating.

A. But you were asking before the Extension or after the Extension?

Q. I don't -- it doesn't matter. I mean, at any point in time, from October 22 --

A. Okay. It doesn't matter. It doesn't matter, you're saying. Okay.

In my statement, I have made reference to the fact that I became aware of a number of penalties that were imposed on Doe Run because of breaches.

Q. Yeah. Right. My question was: Did the MEM ever exercise its option, in the event of a material breach, to shut down the operations? Did that ever happen? That's my question. That's all I'm asking.

A. Not that I am aware of. I'm not aware of the fact that the Plant was shut down by the Ministry, at least I don't have that kind of knowledge. I started working in 2004. Before that, I don't know what happened.

[Page 321]

Q. Okay. Thank you.

I'm going to -- I have just a few more questions for you, so please bear with me.

And this may require me to pay your fee, so I'm going to ask you this.

As a lawyer, do you believe that, in this case, Perú can claim breaches by DRP that occurred before the Extension they were given in 2006? In other words, if you agree that they had more time and they can go forward, do you think you still reserve the right to go back and say, "oh, but, back in 2000, you know, we fined you for X, Y, and Z, and that's a breach of the PAMA"? And I'll pay your fee for that.

A. I cannot provide advice to Doe Run. I can provide advice to any other company, with pleasure, but not Doe Run.

Q. Okay.

A. In answer to your question, I understand that you are asking whether Doe Run was imposed a penalty beforehand because of breaches. Is that what you're asking? Is that the question you're asking?

Q. No. No. Not at all. Not at all.

If -- let's use a simple hypothetical. If you owe me a contractual duty and you fail to perform and I say, "you know what, I'm going to let you -- I'm going to

[Page 322]

give you another chance," and we're going to agree that you have more time, do I have the right to go back after that and say, "oh, but you didn't perform -- when I granted you that -- more time, I still think I can make a claim that you breached your agreement, even though we agreed to change it"? I'd like, you know, the MEM's former Chief Officer to tell me, you know, what he thinks about that.

A. I am going to answer, but the way you have phrased your question -- well, I'm going to ask you to please allow me to explain, if you agree. I'm not going to go long. I'm not going to go on for five minutes, but, you know, just about.

You have asked a question that mixes up two things: Contractual regulations that are born of a Share Transfer Agreement where the Parties have come to compulsory agreements because, in that Contract, they have included obligations, and those obligations effect those Contracting Parties, and not third parties. That STA that Metaloroya entered into with Centromín, in 1997, if memory serves, was governed by Article 62 of the Constitution of Perú that states that contracts are governed by the laws that are current at the time the Contract was executed.

No administrative act or no law that was passed later on will modify contractual relationships or the obligations or anything related to that contractual

[Page 323]

relationship. So Doe Run had a contractual obligation that entails a meeting of the minds of the Parties, but, as the holder of the mining activity, it had other legal obligations. It had to comply with administrative regulations, mining regulations, environmental and mining regulations, tax obligations. It had occupational safety regulations that it had to abide by. All of the regulations that existed in connection with the PAMA and in connection with administrative law, did not have any impact whatsoever on the contractual relations. I can explain further, if you wish. If you pay attention to what I'm saying, sir.

Therefore, we have two different things, two different independent things. There may be related obligations, but the logical thing is that, under a contract, the Parties may say, "okay, you have engaged to do something," for example, to comply with the PAMA. Okay. You can do that. It's an obligation. You're going to commit to paying your taxes. Okay. That's an obligation. But those are obligations that are governed by the Civil Code and by contractual regulations. Environmental Regulations, under the PAMA, under Supreme Decree 046, all of those things are governed by administrative law, and they do not have an impact on the Extension granted. They do not have an impact on the terms provided for in the

[Page 324]

Agreement.

That is why in the Ministerial Resolution and in the August law -- was stated that, in accordance with Article 62 of the Constitution, the modification of terms and the extensions of terms did not have an impact on contractual relations or contractual terms or on the obligations of the Parties that were borne of a contract that was executed.

Q. Are you finished your answer, sir?

A. I have, yes.

Q. Thank you.

I'm going to get to the STA in a second, but, right now, do you remember what my question was?

I'll try it again. It's just a simple hypothetical. We're just dealing with you and me. So we're in Perú, and we make an agreement that you're going to deliver a brief to me by tomorrow, but you come to me today and you say, "I can't get it done by tomorrow," and so I say, "okay, I'll agree that you can get it to me next Wednesday." And you either do or don't get it done by next Wednesday, but can I go back and say, "well, because you didn't give it to me tomorrow, that you breached our agreement," even though I agreed to give you more time? Just hypothetically, you and me. We're not talking about anybody else.

[Page 325]

MS. ÁLVAREZ OLAIZOLA: I'm sorry to interrupt, but I think this is the third time that a question is posed that is hypothetical in nature. I think that the question was asked and answered.

MR. SCHIFFER: Right. Okay. You know what? I won't ask it again then. I mean, if you -- okay.

BY MR. SCHIFFER:

Q. Let's take a look at -- have you reviewed the STA as part of your job as the Chief Legal Officer of the MEM?

A. Back then -- well, let's see. I was not a party, neither was I an advisor to that Contract because the Contract was executed in 1997, and I was not a public servant at all back then.

Q. Right. That's not my question. Sir, that's not my question.

A. But I'm trying to answer your question correctly.

Q. Well, no. No.

A. I'm trying to establish some issues in the sense that I would not have been able to analyze the Contract in detail. I had to look at the Contract, at one point in time, yes, when granting the Extension under Supreme Decree 046.

Q. Okay. So let's look at the STA. I think we're going to put it on the screen, hopefully. We can use C-105, B.B.

[Page 326]

(Comments off microphone.)

MS. ÁLVAREZ OLAIZOLA: We don't have control.

MR. SCHIFFER: Well, we can't -- perfect. Thank you.

BY MR. SCHIFFER:

Q. Let's go to Article --

A. My video turned off. Just a moment.

Q. All right. I have just a few questions about this. First, let's go to Clause 5.1. And if we could put up the Spanish version, B.B., so the Translator doesn't have to translate this. Okay.

Mr. Isasi, I believe you said, in your prior answer, that the PAMA amendment would not change --

A. I can't see. I can't see anything. I can't --

Q. All right. Blow up the Spanish version, B.B. Take the English off, please.

Can you see that, sir?

A. I can't see it fully because it's too big, and then I also see your boxes here with your faces, so I can't see the whole thing. It's covered.

Q. So let's go back to the English and I'll have it translated. Okay. I'm going to read the English version. And I'm not going to read the whole paragraph. I'm just going to read the pertinent part, and it will just be interpreted for you.

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So, 5.1: "Compliance with the obligations contained in Metaloroya's PAMA and its eventual amendments approved pursuant to the legal provisions," and then, which have -- or will be issued, et cetera.

So -- and we can go up -- B.B., let's go up to 5.1, to the top, because I believe it's obligations. Yeah, prior page.

A. I'm not understanding what you're saying. You read really quickly, and I'm not understanding.

Q. Okay. I'll read it again more slowly. But can we look at the top -- B.B., can we just get the heading before we read. Can you blow up the heading. Yeah, right there.

Okay. So this is the fifth clause, and this is entitled "the Company's responsibility in environmental matters."

Do you see that?

A. I do.

Q. Okay. Now, let's go to -- back to where I was reading, and I'll read it again. I'll try to do it more slowly. 5.1: "Compliance" --

A. Please read the whole thing too. Just read the whole thing, not just part of it.

Q. I'm only going to ask you -- I mean, if you want to look at whole thing, we'll show you the whole thing.

[Page 328]

Do you read English, sir?

A. I do not.

Q. Okay.

A. That is why I'm being deposed in Spanish.

Q. Okay. That's fine, but I just was curious if you read English. Okay.

So: "Compliance with the obligations contained in Metaloroya's PAMA and its eventual amendments." Okay. I'm going to stop reading there, if you want to read more, we'll put up the Spanish version, which you say you can't see, so that's a bit of a problem. But I only want to ask you about this.

Will you agree to answer my one question about this?

A. No. I do not have the elements of judgment to provide an answer in connection with an interpretation of a contract. If you would like to ask me about the interpretation of a contract, well, that would require, as I said, to provide all of the information and for me to have enough time to conduct the necessary examination of the Contract and to issue the corresponding report with the relevant invoice for my professional services.

Q. But you don't even know what my question is.

A. But you're asking -- but you're asking whether I am willing to answer a question about contract

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interpretation, and I'm saying that I am not. It is not within my purview to do that. That is why you have hired experts.

Q. Okay. Well, I'm going to ask my question, and you can refuse to answer it. Okay?

My question is: Do you agree that the contractual obligation that Doe Run Perú took on in the STA contemplated complying with the PAMA and its amendments as amended, that was actually contemplated in the Agreement? "Yes," "no," or "I refuse to answer."

A. You can commit to complying with tax obligations or administrative obligations, yes. But that is a commitment entered into between the Parties. So the answer is yes. Yes, there is a commitment by Doe Run to comply with environmental laws, with the PAMA, and with the modifications of the PAMA.

Q. So getting back to --

A. If it doesn't do so, there will be a breach of contract and, also, from the administrative law viewpoint, it would be breaching the law. And these are two different penalties that this entails. The consequences of not complying with this clause are governed by this Contract. If there is a breach of the Environmental Law and with the Extensions of an administrative act, that is governed by the Regulations of SD-46 and the other regulations that

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modify it.

Q. Okay. Mr. Isasi, I raise the white flag. I'm giving up on this line of questions.

I have one more question for you.

You mention, at Paragraph 22 of your Witness Statement, that fugitive emissions presented a problem with a relatively simple solution that did not justify an additional period of five years.

Did I read that right?

A. No. You haven't read it exactly as it is. What I'm saying there is that the Competent Authorities from the MEM -- the Competent Authorities, the Technical Competent Authorities allegedly knew that Doe Run's justification was not substantiated in reality because fugitive emissions presented a problem that was quite easily solved that did not really justify such a long period of time, five years.

Q. Okay. So if it was so easy to solve, why hadn't Centromín solved it in the 23 years that it operated the Plant?

A. I don't know.

Q. Okay.

MR. SCHIFFER: No further questions.

THE WITNESS: You would have to ask Mr. Mogrovejo who was responsible for environmental issues at the time, and I think that now he works for Doe Run.

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BY MR. SCHIFFER:

Q. Right. I would love to ask him but he hasn't been called to testify by the other side. So I'm sorry.

PRESIDENT SIMMA: Right. So that brings an end to the cross-examination and I give the floor back to Ms. Álvarez Olaizola.

MS. ÁLVAREZ OLAIZOLA: That's correct, Mr. President. We have no further questions.

PRESIDENT SIMMA: Questions to my colleagues? Do you want to? No questions?

That gets me to -- to thank you, Mr. Isasi, for having appeared and having answered the questions and explaining the problems. The situation reminded me a bit of certain things as on television happening in Congress in the presence of three university presidents, so it's -- but you did fine, and thank you. You are released now as a witness. Thank you for appearing. Bye-bye.

THE WITNESS: Thank you for your attention. Thank you for your patience as well. Good evening.

PRESIDENT SIMMA: Thank you very much.

(Witness steps down.)

PRESIDENT SIMMA: Okay. It is now -- we have eight minutes left and that probably doesn't justify to call the next person for examination.

MR. PEARSALL: No, it doesn't, in our view,

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Mr. President. The eight minutes perhaps, though, gives us enough time to inquire from Mr. Doe what the current chess clock reads.

SECRETARY DOE: Sure. Yes. The tallies thus far are 2 hours 48 minutes have been used by the Claimant, and 6 hours 45 minutes by the Respondent.

MR. PEARSALL: Thank you, Mr. Doe. If going forward -- we don't need to do it today, but, if going forward, we could break it out without the Openings, which aren't included in that other kind of time block, that would also be helpful, just to keep for accounting purposes of the witnesses.

MR. SCHIFFER: Excuse me. That's part of the 22.5 hours.

SECRETARY DOE: That was my understanding as well, that the 22.5 hours included the Opening Statements.

MR. SCHIFFER: Yeah, it includes everything.

MR. PEARSALL: Yes. You're exactly right.

SECRETARY DOE: But I'd be happy to break it down as the Parties wish.

MR. PEARSALL: That would be helpful for us internally. But I appreciate that.

SECRETARY DOE: Okay.

PRESIDENT SIMMA: So the usual look at tomorrow's program that we are supposed to do, knowing by heart PO 10.

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So the next witness will be Mr. Guillermo Shinno Huamani, and then we have Mr. José Antonio Payet Puccio, Enrique Varsi Rospigliosi. So at least the sequence -- that the order is fine. And we will probably see how far we get; right?

MR. SCHIFFER: My best guess, given the ebb and flow, is that we will definitely get to -- well, I won't be long with Mr. Shinno, and, if they do what they did with Mr. Isasi, then we'll be done within an hour, I think. And that will leave the whole day for the contract Experts, which, my guess is, will take some time.

PRESIDENT SIMMA: Okay. That's all we can, more or less, hope for, expect for tomorrow. Martin.

SECRETARY DOE: Just in the meantime, I did the quick math and it's 1 hour 29 minutes used today by the Claimant on examinations, and 4 hours 2 minutes used today for examination by the Respondent.

MR. PEARSALL: Thank you, Mr. Doe.

PRESIDENT SIMMA: So, thank you very much. And we see each other tomorrow again at 9:30 for the continuation of this exercise. Thank you.

MR. SCHIFFER: Thank you.

MR. PEARSALL: Thank you, Mr. President.

(Whereupon, at 4:56 p.m., the Hearing was adjourned until 9:30 a.m. the following day.)

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POST-HEARING REVISIONS

CERTIFICATE OF REPORTER

I, Dawn K. Larson, RDR-CRR, Court Reporter, do hereby attest that the foregoing English-speaking proceedings, after agreed-upon revisions submitted by the Parties, were revised and re-submitted to the Parties per their instructions.

I further certify that I am neither counsel for, related to, nor employed by any of the Parties to this action in this proceeding, nor financially or otherwise interested in the outcome of this litigation.

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Transcript Prepared by Larson Reporting, Inc.

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