Asarco awaits bankruptcy court recommendation to determine future of AZ copper miner

Miner Asarco awaits key bankruptcy recommendation

DENVER — A court will soon decide if Asarco LLC, the nation’s third-largest copper producer, will leave bankruptcy protection and return to Grupo Mexico’s control or be sold to India’s Sterlite Industries.

U.S. Bankruptcy Judge Richard Schmidt was scheduled to recommend Monday whether Asarco’s parent, Grupo Mexico, will regain the assets or whether they should be sold under a plan fashioned by Mumbai-based Sterlite and Tucson, Ariz.-based Asarco. A federal district judge will have final approval.

The outcome of the four-year-old case involves three Arizona mining operations and a Texas refinery as well as more than $6 billion due Asarco related to a fraudulent stock conviction against Grupo Mexico that the Mexico City-based company is appealing.

Employees and most creditors favor the Asarco-Sterlite offer. The Indian company has bid $2.1 billion with a nine-year, $208 million copper price participation note and said it will fully pay creditor claims.

Grupo Mexico has offered $2.2 billion in cash and a $280 million one-year note. It, too, pledges full payment to creditors.

One creditor group has backed both plans.

In closing arguments before Judge Schmidt last week, Grupo Mexico attorney Robert Moore said his company owns Asarco and its offer meets the legal obligations to retain ownership.

The Steelworkers Union representing Asarco workers backs the Sterlite offer because the company has negotiated a long-term contract with them whereas Grupo Mexico has not, union spokesman Manny Armenta said Friday.

“This is the court’s decision but if it came down for Grupo to take over, we are not going to work,” he said. “We will go to strike.”

Community leaders, elected officials and merchants in the mining towns also back Sterlite, he added.

When Asarco LLC filed for Chapter 11 reorganization in August 2005, its unions were on strike; it was facing environmental and asbestos liabilities in the billions of dollars; it had run out of cash and was struggling amid a sagging copper market.

In a separate civil lawsuit filed by Asarco, U.S. District Judge Andrew Hanen in Brownsville, Texas, ruled Americas Mining was liable for a fraudulent stock transfer and ruled it was done partly to hinder payment to creditors.

He ordered the subsidiary to return the 54 percent stake in the Peruvian mining company’s stock to Asarco and awarded net monetary damages of about $1.4 billion. Grupo Mexico has appealed that ruling to a federal appeals court.