Grupo mexico offers billions for asarco asbestos claims

Grupo Mexico, the parent company of ASARCO, has offered up to $4.1 billion to pay off liability claims against its bankrupt subsidiary. With the month-long trial almost over, Grupo Mexico has made several proposals in its efforts to retain ownership of the Peruvian copper mine which has caused considerable trouble for both companies. Grupo Mexico is a mining conglomerate headed by Chairman and Chief Executive German Larrea Mota-Velasco. The company is the world’s third largest producer of copper, and has mining interests in several South American locations. ASARCO filed for bankruptcy in 2005, and during the process a bankruptcy judge removed Grupo Mexico’s control over the company due to allegations that the parent company was stripping ASARCO’s assets in an attempt to protect those assets from asbestos and environmental liability claims. One of those assets was the Peruvian copper mine which was ASARCO’s most valuable asset, and which was arguably the main reason for Grupo Mexico acquiring the company. Among ASARCO’s claims are that Grupo Mexico knew it faced potential liabilities of more than $1 billion when it acquired the ASARCO company in 1999, and also that the parent company knew it might also shoulder the responsibility of cleaning up to twenty Superfund sites. In addition, ASARCO claims that Grupo Mexico stripped the subsidiary of assets, including Peruvian copper mines that ASARCO once had a significant stake in and were the company’s most significant asset. ASARCO claims that Grupo Mexico did this to prevent the mines being used to pay ASARCO’s creditors. ASARCO also claims that Grupo Mexico used the fact that it controlled all the parties in the transaction to its own advantage, because this allegedly allowed the parent company to underpay ASARCO for the mines. ASARCO’s legal battle began Monday May 12, with the beginning of a multi-billion dollar civil lawsuit against Grupo Mexico. German Larrea Mota-Velasco was among those who testified at the trial. Larrea Mota-Velasco repeatedly denied that the Andes copper mines in question were a prime motivator for either himself or the company, and also stated that he had never intended ASARCO should be forced into bankruptcy. With the trial over, Grupo Mexico has offered a settlement worth more than $4 billion in its effort to prevent ASARCO being sold to Sterlite Industries, which had offered $2.6 billion. The parent company has repeatedly promised a “full recovery” for all of ASARCO’s environmental and asbestos-related claims. (Source: Asbestos and Mesothelioma News)