Almost all young children in Peru’s La Oroya mining town have harmful levels of lead in their blood and many are suffering from bronchitis and stunted growth because of toxic gases pumped out by the U.S.-owned metals smelter there, community groups said on Wednesday.

Emissions from Peru’s top smelter in the central Andes are also causing acid rain, polluting rivers with zinc and arsenic and creating “generations of sick people,” non-governmental organizations (NGOs) and La Oroya community groups told a mining conference in Lima.

A government decision to grant more time to U.S.-based Doe Run - the owner of Peru’s biggest integrated lead, copper and zinc smelter - to clean up its toxic emissions will only subject children to more pollution and increase the incidence of lung, liver and kidney disease in La Oroya, they said.

“In the latest study by Doe Run and the health ministry, 99.9 percent of children under six have lead blood levels above what the World Health Organization calls normal,” said Hugo Villa, a doctor who heads the La Oroya Health Movement.

“Our children are being poisoned by this smelter. It is creating generations of sick people,” he added.

Doe Run said it was aware of the health problems and would halve its zinc production this year to reduce sulfur dioxide emissions. It said it would also work to cut so-called fugitive emissions that leak out of smelter windows, doors and roofs.

The smelter and its smoke-chugging chimney dominate La Oroya and the whole economy of the region, indirectly supporting 50,000 people.

“We’ll have all heavy metal emissions controlled by 2006 and we will also build a plant to treat waste water by next year, so the situation will improve,” Doe Run Peru’s environmental chief, Jose Mogrovejo, told Reuters.

“But we cannot reduce arsenic and other heavy metal emissions to zero. No company can do that,” he added.

Under Peru’s environmental laws, the Missouri-based company was required to build a $100-million sulfuric acid plant to cut sulfur dioxide emissions by 2007. But Doe Run said it needed until 2011 or it would be in default on bank loans and be forced to pull out of Peru.

Peru in December published a law granting mineral companies an extra four years to cut toxic emissions.

WILL THE PLANT BE BUILT?

Community groups and NGOs pushing for a more rapid clean-up of La Oroya said they feared Doe Run would not meet the 2010 deadline for the sulfuric acid plant, despite a government requirement for the company to present a financial guarantee.

“Doe Run Peru should have the cash flow to build the plant, but I wouldn’t bet on it happening,” said Ken Traynor of the Toronto-based Canadian Environmental Law Association.

“Doe Run has more than $300 million in long-term debt and it could be forced to use the money that should go to the plant to pay its creditors,” he added. Doe Run was not immediately available for comment.

Doe Run, which said it invested $135 million in La Oroya between 1997 - when it bought the smelter - and 2004, now sees investment of $226 million between 2004 and 2011, of which $155 million will go to meeting environmental regulations and the rest for modernization.