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Sterlite to buy operating assets of Asarco for $2.6 b

MUMBAI: Sterlite Industries (India), a subsidiary of London-based metal and mining group Vedanta Resources plc, on Saturday signed a definitive agreement with Asarco LLC, a Tucson-based mining, smelting and refining company for the sale to Sterlite of all the operating assets of Asarco for $2.6 billion in cash.

The agreement is subject to the approval of the U.S. Bankruptcy court for the Southern District of Texas, Corpus Christi Division, and the sale will conclude Asarco’s Chapter 11 case.

The asset acquisition will be financed by Sterlite through a mix of debt and existing cash resources.

The 100-year old Asarco, formerly known as American Smelting and Refining Company is now the third largest copper producer in the U.S. having produced 2.35 lakh tonnes of refined copper in 2007.

Its mines have estimated reserves of about five million tonnes of contained copper. For the year ended December 31, 2007, Asarco had total revenues of about $1.9 billion.

The integrated assets to be acquired include three open-pit copper mines and a copper smelter in Arizona, U.S. and a copper refinery, rod and cake plant and precious metals plant in Texas.

The asset acquisition is on a cash-free and debt free basis and Sterlite will assume operating liabilities but not legacy liabilities for asbestos and environmental claims for ceased operations.

“We are delighted to have reached an agreement on this important acquisition, which is a significant milestone for our group,” said Anil Agarwal, Chairman, Sterlite, in a joint statement issued here. According to Asarco President and CEO Joseph F. Lapinsky, “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.”

Sterlite’s main operating subsidiaries are Hindustan Zinc for zinc and lead; copper mines of Tasmania Pty in Australia; and Bharat Aluminium Company for aluminium operations.

Shanthi Kannan writes from Chennai:

Regarding funding, a spokesperson of Sterlite said the company had kept its options open. However, it would absorb the entire employees of Asarco. The revenue of the company depended on the price of the copper, he added. However, the company’s position will improve from the fifth to the third with this acquisition.

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