Ariz. mining co. seeks billions from parent

Asarco's fight to recover begins Monday with the start of the trial of a multibillion dollar civil lawsuit against its Mexican owners -one of the country's wealthiest families.

On the line will be a chance for a long list of Asarco's creditors -western states struggling to clean up polluted sites, asbestos victims, bond creditors and more -to get paid.

Asarco is seeking more than $10.5 billion from Americas Mining Corp. in the form of the return of a stake it had in two lucrative Peruvian copper mines and the $1.7 billion dividends it collected in recent years from those mines.

"We hope this fund can be used in great part to clean up many of the sites across the West," said G. Irvin Terrell, lead attorney for Asarco, who is essentially representing Asarco's creditors.

Both companies are subsidiaries of Grupo Mexico, a mining conglomerate headed by German Larrea. In addition to mining interests from Mexico to Chile that make it the world's third-largest copper producer, Grupo Mexico also controls the country's largest railroad. Forbes ranked Larrea at No. 127 on its list of the world's billionaires with a fortune estimated at $7.3 billion.

Larrea, chief executive of Grupo Mexico and AMC, is expected to testify. The trial has been scheduled for four weeks before U.S. District Judge Andrew Hanen.

Asarco claims Grupo Mexico, which acquired Asarco in 1999, knew that it faced potential liabilities exceeding $1 billion over asbestos claims as well as environmental cleanup of 20 Superfund sites around the U.S. So Grupo Mexico transferred one of Asarco's most valuable assets -the Peruvian copper mines -to its mining arm AMC to protect it from being used to pay thousands of creditors.

Asarco alleges that Grupo Mexico used its control of all the parties involved to underpay for the mines and leave Asarco effectively broke. Asarco, which operates three mines and a smelter in Arizona, as well as a copper refinery in Amarillo, filed for bankruptcy in August 2005.

The U.S. Department of Justice initially moved to block the transfer, but eventually negotiated an agreement with Grupo Mexico that required it to pay $765 million, including $100 million to set up an environmental trust fund to pay claims.

Charles Beckham, an attorney representing AMC, declined to comment on the case. But court filings show that AMC will argue that the Justice Department's eventual approval of the deal protects it against charges of wrongdoing. AMC has made a counter claim against Asarco.