Asarco Out $27.3 Mil To Settle Colo. SuitPublished by MAC on 2007-08-30
Source: The Arizona Republic
Asarco out $27.3 mil to settle Colo. suit
Max Jarman, The Arizona Republic
30th August 2007
Tucson-based Asarco LLC said Wednesday that it will pay $27.3 million to settle more than $200 million worth of environmental claims stemming from the company's century-old mining operations in Leadville, Colo.
The settlement with the U.S. Environmental Protection Agency, Colorado and other parties has been approved by the U.S. Bankruptcy Court in Corpus Christi, Texas, where Asarco's two-year-old Chapter 11 bankruptcy case is being heard.
Asarco has about 3,000 Arizona employees and the state's third-largest mine owner, behind Freeport-McMoRan Copper & Gold Inc. and Southern Copper Corp. The company has three operating mines and a smelter in Arizona that are producing huge profits because of prolonged high copper prices. The profits are the basis for cash to be used to settle the claims.
The agreement sets the stage for the eventual settlement of as much as $11 billion worth of environmental claims that have been filed against the Arizona copper producer.
The claims, including $2.6 billion from employees of a former asbestos plant, contributed to the company's decision to seek Chapter 11 bankruptcy protection. Settlement of the claims is necessary for the company to emerge from bankruptcy, and a number of companies have expressed interest in buying Asarco when that happens.
The Texas court will hold hearings through November to validate and attempt to settle the claims.
The Leadville case involves a Superfund site known as California Gulch, where gold, silver, lead and copper were mined from the early 1860s until 1999. Asarco operated a smelter in the area from 1899 to 1960.
Under the settlement approved Tuesday, Asarco won't oppose $19.3 million in claims that the U.S. and Colorado governments will file in the bankruptcy case. The company will pay $2 million in cash to its joint-venture partner in its Colorado mining operations. That partner, Resurrection Mining Co., also will get an uncontested $6 million claim in Asarco's bankruptcy case.
Although Asarco is nominally owned by Mexico City's Grupo Mexico SA, it is being operated by a committee of its creditors. The operating group recently sued 13 executives of its Mexican parent, accusing them of mismanaging the company and improperly stripping away its valuable assets before placing it into Chapter 11 bankruptcy.
The suit says Grupo primarily was interested in Asarco's valuable 54.2 percent stake in Southern Peru Copper Corp., now Southern Copper Corp. Once it was stripped away, Grupo isolated billions of dollars of environmental liabilities in Asarco and ran it into the ground, the suit alleges. The creditors earlier this year sued to recover the stock in Southern Copper, which they allege was sold for hundreds of millions of dollars below its value.