Environmental organizations Tuesday hand-delivered a letter to U.S. Attorney General Michael Mukasey, urging the U.S. Justice Department to proceed with caution before turning over Asarco to a new corporate parent with a track record of environmental and other abuses.
Asarco executives Saturday signed a deal approving the sale of the bankrupt U.S. copper miner to Vedanta Resources' subsidiary Sterlite Industries for US$2.6 billion.
However, a U.S. bankruptcy court in Corpus Christi, Texas, must approved the sale. An expedited hearing is scheduled June 12, 2008, before U.S. Bankruptcy Judge Richard Schmidt.
The environmental NGOs' letter to Mukasey was also copied to Texas Attorney General Greg Abbott, who serves on the Asarco credit committee, and Arizona Attorney General Terry Goddard. In the document, the organizations said, Given the leadership that will be needed to bring an end to Asarco's legacy of pollution on what is a nearly unprecedented scale, we strongly recommend that the purchaser of Asarco have a clean environmental record in both the U.S. and abroad. We are deeply disturbed by reports that Asarco nay have handed over to one of a number of companies that have pollution records that are so bad that they threaten to eclipse Asarco's sorry example.
When Asarco filed for Chapter 11 bankruptcy in August 2005, the company cited the more than 100 civil environmental lawsuits as some of the main reasons for the bankruptcy filing. At the time, Asarco also owed more than $100 million in fines for noncompliance with state and federal clean-up orders. The filing puts these lawsuits and efforts to collect environmental damages on hold, according to the NGOs.
In a background to their letter, the NGOs claimed that last year Vedanta stock was dropped by the Norwegian pension fund due to environmental abuses.
The environmentalists also claimed that Vedanta mining and metal production subsidiaries have caused major water contamination in Zambia and India. Meanwhile, they also alleged that the Indian Government has targeted Vedanta subsidiaries for their poor waste practices.
Their letter also make reference to a $50 million penalty reportedly levied by the Armenian Government on Vedanta subsidiary Ararat Gold Recovery Company for various acts associated with its gold mining in Armenia, [allegedly] including mining more gold than permitted by the government, deliberately under-valuing its reserves, and failing to properly dispose of mine wastes.
The environmental groups which wrote the letter to the U.S. Attorney General included the Sierra Club, the Environmental Integrity Project, Public Citizen-Texas Office, Galveston Houston Association for Smog Prevention and the Sustainable Energy and Economic Development (SEED) Coalition.
ASARCO SELECTION MEETING
In documents filed with the federal bankruptcy court Monday, Asarco said 130 people attended the Plan Sponsor Selection Meeting in Dallas on May 22 & 23. Asarco informed the other bidders that it has selected Sterlite as the lead bidder and gave the other bidders 90 minutes to top Sterlite's bid, but none did, with two of the three other bidders exiting the building prior to the expiration of the 90 minute period. Thus, Sterlite emerged as the Successful Bidder at the conclusion of the Plan Sponsor Selection Meeting.
Asarco asked the court to enter an order approving the bid procedures motion.
However, Asarco parent Grupo Mexico said it repeatedly requested additional information from Asarco, which was denied. Asarco attorneys responded that Grupo Mexico was allegedly trying to drive away other bidders and keep Asarco for itself. Grupo has vowed to fight the proposed sale to Sterlite.