Mumbai India's Sterlite Industries may find itself legally battling mano y mano with Grupo Mexico for the hand of the bankrupt but still fiscally promising Arizona-based copper miner Asarco.
Sterlite Industries scheduled a press conference Monday heralding its purchase of Asarco for $2.6 billion in cash. In a news release, Sterlite said the acquisition would give the Indian company geographic diversification in the North American market, and provide access to attractive mining assets with long life.
The agreement is subject to the approval of the U.S. Bankruptcy Court for the Southern District of Texas, Corpus Christi Division, which, as of deadline early Monday had not uttered a word about the proposed sale. Bankruptcy Judge Richard S. Schmidt has scheduled a hearing for June 12 and 13 whether to approve the sale.
Four competitors were vying to reorganize Asarco and buy its assets, estimated to have increased more than fivefold since 2003. Grupo Mexico bought Asarco in 1999, splitting off its most lucrative assets into Southern Peru Copper. The remaining U.S.-based Asarco assets filed for bankruptcy in 2005.
The third largest U.S. copper miner, Asarco, which was founded more than century ago, still produces 350 million to 400 million pounds of copper annually. Last year it reported revenue of $1.9 billion.
Grupo's critics claimed that Grupo deliberately made a series of transfers to place Asarco's assets beyond the reach of asbestos claimants, environmental claimants and general claimants of the Asarco estate.
The assets to be acquired by Sterlite include three open-pit copper mines and a copper smelter in Arizona and a copper refinery, rod and cake plant and precious metal plant in Texas. The asset acquisition is on a cash free and debt free basis. Sterlite will assume operating liabilities but not legacy liabilities for asbestos and environmental claims for closed operations.
Sterlite is a leading copper miner in India and is part of Vedanta Resources, a London listed metals and mining major with aluminum, copper and zinc operations in India and Australia.
We are extremely pleased with this agreement, Asarco President and CEO Joseph F. Lapinsky said. Reaching this agreement with a world class mining company is a giant step forward in our quest to successfully emerge from Chapter 11. The sale will achieve the overall best value for Asarco, its employees, creditors and the local communities in which we operate.
In an interview with Reuters, Grupo Mexico Vice President Jorge Lazalde said, We will not stop until we get back what is ours.
We are going to do absolutely everything necessary, Lazalde declared. He told Reuters that the bidding process was unfair and that Grupo Mexico was willing to drag on the legal battle, which has cost $100 million thus far.
Maybe this judge won't rule in our favor, but a higher judge will see this is totally an abuse (of our rights), Lazalde said.