Make India Asbestos Free

Make India Asbestos Free
For Asbestos Free India

Journal of Ban Asbestos Network of India (BANI). Asbestos Free India campaign of BANI is inspired by trade union movement and right to health campaign. BANI has been working since 2000. It works with peoples movements, doctors, researchers and activists besides trade unions, human rights, environmental, consumer and public health groups. BANI demands criminal liability for companies and medico-legal remedy for victims.

Friday, March 6, 2009

Vedanta disowns Asarco's liabilities for asbestos & environmental crimes

Asarco, formerly known as American Smelting and Refining Company has gone bankrupt

London-listed Vedanta Group subsidiary Sterlite Industries is planning to submit a new bid for bankrupt US copper miner Asarco at almost half the $2.6 billion it offered 10 months ago.

Media reports say that the new bid ranges from $1.4 billion to $1.5 billion with Sterlite reportedly making installment payments over a five-year period. However, the initial payment is expected to be half of the purchase price.

If the deal goes through, fifth place Sterlite will become the world's third largest copper miner with an annual capacity of 650,000 tonnes and proven copper reserves of 5 million tonnes.

The meltdown in copper prices is believed to be the main reason for cutting the acquisition price, analysts opined yesterday.

Analysts predict that global copper prices will fall below $3,000 per tonne, and could even plunge to $2,500 in 2009. Price of copper in 2007 was around $6,250 per tonne due to stabilisation of supply compared to 2006.

Sterlite and Asarco's parent Grupo Mexico have been in negotiations over the deal for months.

Grupo Mexico bought Asarco, a Tucson-based mining, smelting and refining company, in 1999. However, eventually labour disputes led to a four-month strike, which ended in 2005 when Asarco filed for bankruptcy protection.

Grupo subsidiary Americas Mining had submitted its own reorganisation plan to retain its interest in Asarco, offering to pay up to $2.7 billion in as well as post a $440 million to ensure payment of Asarco's liabilities stemming from the asbestos and environmental litigation.

However, Sterlite and Asarco had signed a definitive agreement for the sale of substantially all the operating assets of Asarco for $2.6 billion in cash.

''We are delighted to have reached agreement on this important acquisition, which is a significant milestone for our group,'' Anil Agarwal, chairman, Sterlite, had said at that time.

Asarco's president and chief executive officer, Joseph F Lapinsky shared Agarwal's enthusiasm, saying that "we are extremely pleased with this agreement.''

''Reaching this agreement with a world class mining company is a giant step forward in our quest to successfully emerge from Chapter 11,'' he said.

A good fit
Asarco is considered as a logical and strategic fit to Sterlite's existing copper business and is expected to create significant long term value for all stakeholders.

The integrated assets to be acquired include three open-pit copper mines and a copper smelter in Arizona, US and a copper refinery, rod and cake plant and precious metals plant in Texas, US. The asset acquisition is on a cash free and debt free basis.

Sterlite will assume operating liabilities but not legacy liabilities for asbestos and environmental claims for ceased operations.

Last October, Sterlite backed out of the deal saying it would need a substantial reduction in price after a drop in the copper markets.

Sterlite has been facing several other issues regarding the takeover attempt since from the beginning.

The deal drew opposition in the US as several Green groups have urged the department of Justice to review the bid.

In their joint letter, Sierra Club, Environmental Integrity Project and Public Citizen/Texas Office claim Vedanta's environmental track record is worst than Asarco's, which filed for bankruptcy after being sued for $1 billion in environmental and asbestos-related litigation.

Vedanta is essentially a metals player with interests in copper, aluminum and zinc. Apart from Asarco, its copper assets are a smelting business in India (which needs imported feedstock), two copper mines in Australia which it bought before its 2003 London listing, and the Konkola copper mines in Zambia acquired in November 2004. In zinc and aluminum, its assets are almost entirely in India.

Asarco, formerly known as American Smelting and Refining Company, is an over 100-year old company and is currently the third largest copper producer in the US. It produced 235,000 tonnes of refined copper in 2007.

Asarco's mines currently have estimated reserves of approximately 5 million tonnes of contained copper. For the year ended 31 December 2007, Asarco had total revenues of approximately $1.9 billion.

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