Glencore and Washington Group bidding for Asarco copper mines and smelters

Swiss metals company Glencore, which earlier this year bought U.S. miner Asarco’s zinc operations, now wants to buy Asarco’s remaining copper and molybdenum mining and smelting operations, according to documents filed with a Corpus Christi, Texas, federal bankruptcy court.

In a December 26th court filing, which was just made public by a Mexican investor, Glencore said it was forming a joint venture with the Washington Group, to make ”an offer to purchase substantially all of the Debtors’ assets,” according to Reuters.

The proposed new joint venture””which would be called ACRE Acquisition Company LLC–would assume certain environmental cleanup obligations for any of the purchased Asarco assets.

Glencore International has also been involved with Washington Group in another mining transaction involving the outsourcing of mining and related operations for Glencore’s Jamaican bauxite and alumina operations.

In 2005, the EPA identified 30 Asarco sites in the United States which would require environmental cleanup. At least 19 of those sites have been designated as Superfund sites. In 2003, Asarco and the EPA set up a $100 million trust fund to help pay for the environmental clean-up costs, which have been estimated to range between $500 million and $1 billion.
The company is also facing 95,000 asbestos-related claims.

Asarco’s currently operating properties include the Mission, Ray and Silver Bell mines and the Hayden smelter in Arizona, and the Amarillo refinery in Texas.

Glencore had sued Asarco for $29.4 million for reportedly breaching a business contract involving the sale of blister copper by Glencore to Asarco, or the refining and return of refined copper delivered by Glencore to Asarco. In court documents, both Glencore and Asarco confirmed that Asarco owed Glencore $29.426 million, excluding interest owed on the debt since January 2002. The two companies had been unable to agree on a payment plan.

In May of this year, Glencore won a cash auction for Asarco’s idled Tennessee Mines Unit zinc mines with the Swiss company’s bid of $65 million.

Asarco filed for Chapter 11 bankruptcy protection in August 2005 and has asked a federal bankruptcy judge to extend its reorganization until May 2007. Mexican conglomerate Grupo Mexico is Asarco’s parent company.

Source: www.mineweb.net