Asarco had filed for bankruptcy and faces environment-related liabilities. Sterlite has ring-fenced itself against these liabilities and is just buying the copper mines, smelter and refinery of Asarco, said a senior Sterlite executive.
The deal is subject to the approval of US Bankruptcy Court for the Southern District of Texas, Corpus Christi Division, and the sale will conclude Asarco's Chapter 11 case. The assets were auctioned by the court through an open process, conducted by Lehman Brothers.
Asarco, known earlier as the American Smelting and Refining Company, is over a century-old company and is today the third largest copper producer in the US. It produced 235,000 tonnes of refined copper in 2007. The integrated assets to be acquired include three open-pit copper mines and a copper smelter in Arizona and a copper refinery, rod and cake plant and precious metals plant in Texas.
Asarco's mines currently have estimated reserves of about 5 million tonnes of contained copper. For the year ended December 31, 2007, Asarco had total revenues of about $1.9 billion. The asset acquisition will be financed by Sterlite through a mix of debt and existing cash resources. Sterlite will not acquire the cash and debt of Asarco nor assume its legacy liabilities for environmental claims.
"We are delighted to have reached agreement on this important acquisition, which is a significant milestone for our group," said Anil Agarwal, chairman, Sterlite. "The acquisition is in line with our stated strategy of leveraging our established skills."
"This agreement is a step forward in our quest to successfully emerge from Chapter 11," said Asarco's President and CEO Joseph F Lapinsky. "The sale will achieve the overall best value for Asarco, its employees, creditors and the local communities, in which we operate," he added.
Asarco is a logical and strategic fit with Sterlite's existing copper business and provides it access to attractive mining assets with long life, diversification into the North American market and an opportunity to develop Asarco's mines and plants.
