Sterlite to buy US copper mining firm for $1.7 bn

March 7th, 2009 - 7:00 pm ICT by IANS  

Mumbai, March 7 (IANS) Sterlite Industries India, a subsidiary of London-based Vedanta Resources run by industrialist Anil Agarwal, Saturday said it was acquiring the assets of the bankrupt US copper mining firm Asarco for $1.7 billion.
Apart from making an outright cash payment of $1.1 billion, Sterlite will also pay the Tucson-based mining, smelting and refining company $600 billion over nine years, of which $460 million will be in the terminal year.

“The agreement is subject to the approval of the US Bankruptcy Court for the Southern District of Texas, Corpus Christi Division,” said a statement issued by Sterlite, listed on the Bombay Stock Exchange and the New York Stock Exchange.

Asarco, formerly called American Smelting and Refining Co, is a 110-year-old company and is ranked third in terms of copper production in the US. It sold some 237,000 tonnes of refined copper in 2008.

According to the company, which reported total revenues of $1.9 billion and a pre-tax profit of $393 million for 2008, its mines have estimated reserves of five million tonnes of contained copper.

“We are happy that we have reached agreement with Asarco on these new terms,” said Agarwal, the chairman of Sterlite.

“This acquisition is in line with our strategy of leveraging our existing skills to become a diversified global copper producer and creating long-term value for shareholders.”

The shares of Sterlite had closed Friday with a gain of 1.85 percent at Rs.250 on the Bombay Stock Exchange.

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

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

The Agarwals had retained the services of RBS Securities as financial advisors for the deal, while Shearman and Sterling were their legal advisors. Barclays Capital were the financial advisors for Asarco.

Sterlite Industries is India’s largest non-ferrous metals and mining company with interests and operations in aluminium, copper and zinc and lead. Its parent is a London-based diversified company on the FTSE 100 metals and mining group.

Sterlite’s main subsidiaries include Hindustan Zinc, Copper Mines of Tasmania and Bharat Aluminium. The company is also setting up a 2,400 MW independent power plant in India through another subsidiary, Sterlite Energy.

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