The Hindu Business Line : Sterlite wins bid for Asarco

Sterlite Industries Ltd has agreed to buy the entire operating assets of the US-based copper mining company Asarco Llc for $2.6 billion (around Rs 11,050 crore) in cash.

Sterlite emerged as the highest bidder in a court-approved auction; other bidders included Grupo Mexico which owned Asarco before the latter became bankrupt.

“This is a great moment for me. I started to build the largest company in the world for metal and mining four years ago, and this acquisition will add greatly towards my effort. With Asarco in our fold, we will become a significant player in the global copper business,” Mr Anil Agarwal, Chairman, Sterlite, told Business Line from the US on Saturday.

The Vedanta Group (of which Sterlite is a subsidiary) has copper businesses in Zambia (Africa), in Australia and now, in the US, he said.

The Asarco deal, subject to the approval of US Bankruptcy Court, will be funded through a mix of equity and debt, Sterlite said in a statement. Asarco had filed for bankruptcy in 2005 after it was sued for $1 billion in claims related to environmental issues.

“Money is not a problem, we have more than $5 billion lying with us. But we will go for some debt to finance this acquisition,” said Mr Agarwal.

Based in Tucson, Asarco, formerly known as American Smelting and Refining Company, is over 100 years old and is currently the third largest copper producer in the US. Its assets include three open-pit copper mines, a smelter in Arizona and a copper refinery, rod unit and precious metals plant in Texas, the statement said.

Smelting capacity

Asarco mines, with reserves estimated at five million tonnes (mt) of copper, produced 2.35 lakh tonnes (lt) of copper in 2007 and earned revenues of about $ 1.9 billion.

With this acquisition, Sterlite will have copper smelting capacity of 6.30 lt and proven copper reserves of five mt. Sterlite has a copper smelting facility in Tuticorin in Tamil Nadu.

The smelting capacity of Vedanta Group, parent company of Sterlite, as a whole will go up to 1.1 mt. The mines owned by the group now will have estimated copper reserves of 12 -13 mt, said a company official.

No legacy liabilities

“The asset acquisition is on cash free and debt-free basis. Sterlite will assume operating liabilities, but not legacy liabilities for asbestos and environmental claims for ceased operations,” said the company statement.

Mr Agarwal said Asarco is a profit-making company and employs around 3,000 people. “Generally, we will take care of the people. We will need more people,” he said. “We may have to invest some more for modernisation.”

Sterlite also has interests in aluminium, zinc and lead and controls Hindustan Zinc Ltd, Bharat Aluminium Company Ltd.

London Stock Exchange-listed Vedanta, which owns 79.25 per cent of Sterlite, is controlled by Mr Anil Agarwal and his family.

Sterlite shares closed at Rs 934.9 on the BSE on Friday, up by 2.83 per cent from the previous close.

The Sterlite’s consolidated net profit for the year ended March 31, 2008, increased by 0.2 per cent to Rs 4399.3 crore.

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