Sterlite to buy US copper mining company Asarco for $1.7 billion

07 March 2009

Sterlite Industries (India) Limited, a subsidiary of the London-based Vedanta Resources Plc, has signed a new agreement with Ascaro LLC, a Tucson, US-based mining, smelting and refining company, for purchase of substantially all its operating assets.

Anil Agarwal-promoted Sterlite Industries said it has signed an agreement to acquire Ascaro LLC, America's third largest copper producer, for $1.7 billion (Rs 8,756.6 crore).

Sterlite will make a cash payment of $1.1 billion on closing; and  a senior secured non-interest bearing promissory note for $600 million, payable over a period of nine years  - $20 million per year from the end of second year for a period of seven years; and (ii) a terminal payment of $460 million at the end of the ninth year, totaling $600 million.

In the event that the annual average of daily copper prices in a particular year increases beyond $6,000 per tonne, the annual payment in that year will be proportionately increased subject to a maximum of $66.67 million and the terminal payment in the ninth year will be correspondingly reduced, keeping the total payment at $600 million.

The principal amount of the note will be adjusted for any variations in working capital on closing. The obligations under the note are secured against the assets being acquired and are without any recourse to Sterlite.

The agreement is subject to the approval of the US Bankruptcy Court for the Southern District of Texas, Corpus Christi Division.

Asarco sold approximately 237,000 tonnes of refined copper in 2008.  Its  mines currently have estimated reserves of 5 million tonnes of contained copper.