TUCSON, Ariz. (AP) -- The acquisition of bankrupt copper miner Asarco LLC for $2.6 billion by India-based Sterlite Industries Ltd. is in doubt after Sterlite said it was backing out of the deal.
Lawyers for Tucson-based Asarco informed a federal bankruptcy judge in Texas on Tuesday that Sterlite "cannot and will not" close the sale unless Asarco agrees to a price reduction.
A statement released late Tuesday by Asarco said Sterlite has not alleged that the purchase agreement it signed in May is unenforceable or that it lacks cash to close the deal. Asarco president and chief operating officer Joseph Lapinsky said the company is reserving it rights under the agreement.
Sterlite is a subsidiary of Vedanta Resources, a London-based metal and mining group.
Asarco said it was told by Sterlite that recent world economic events affecting credit markets have impacted its expected financing for operations and acquisitions. Falling copper prices also have affected Sterlite's willingness to close the deal.
Copper has fallen from a per-pound high above $4 in July to about $2.30 this week.
Asarco is in the midst of a bitter battle with its former parent company, Grupo Mexico SAB, over actions its says stripped it of its best assets and left it with huge liabilities that led to its 2005 bankruptcy filing.
On Aug. 30, U.S. District Judge Andrew Hanen in Brownsville, Texas, ruled that the Grupo Mexico subsidiary Americas Mining Corp. breached its responsibility to Asarco's creditors by transferring Asarco's stock ownership in Southern Peru Copper Corp.
Asarco is seeking more than $10 billion in damages and stock shares after the judge ruled that Americas, a subsidiary of Grupo Mexico SAB, breached its fiduciary duties. Americas contends no stock should be returned and far less cash should be awarded.
Late last week, Hanen ordered Asarco and Americas to hold mediation talks aimed at reaching a settlement.
Asarco produced 259,043 tons of refined copper in 2007. It had total revenues of nearly $1.9 billion for the year ending December 2007. The company owns three open-pit copper mines and a copper smelter in Arizona, as well as a copper refinery, rod and cake plant and precious metals facility in Texas.
It has been dogged by environmental claims at more than 100 sites across the country and is working to settle those as a part of the bankruptcy process.