ASARCO parent pays $1.79 billion in environmental bankruptcy settlement

The Environmental Protection Agency (EPA), other federal agencies and states will receive over $1.79 billion to address contamination at over 80 sites through resolution of the American Smelting and Refining Company (ASARCO) bankruptcy.

For EPA, which is receiving approximately $1 billion for future cleanup of Superfund sites, it is the largest bankruptcy settlement ever. The amount represents full payment of EPA’s claims, plus interest. Funds are being distributed pursuant to settlement agreements approved in 2007, 2008 and as most recently as June of 2009.

The cost recovery settlement for the Omaha Lead site in Nebraska provides payment of $130.4 million for past costs incurred by the agency, the largest amount achieved by the Superfund enforcement program for a single site.

Five settlement agreements were approved by the Bankruptcy Court in June 2009, but the Bankruptcy and District Courts had to approve ASARCO’s Plan of Reorganization before funds from all the settlement agreements could be distributed.

ASARCO was originally organized in 1899 and has operated for over 100 years, first as a holding company for diverse smelting, refining and mining operations throughout the United States and now as a Tucson-based integrated copper mining, smelting and refining company.

ASARCO is a subsidiary of ASARCO Inc., itself a subsidiary of Americas Mining Corporation, which is owned by Grupo Mexico.

  • On August 9, 2005, ASARCO filed for reorganization under Chapter 11 of the Bankruptcy Code in the United States Bankruptcy Court for the Southern District of Texas, Corpus Christi Division.
  • On August 1, 2006, the United States filed a bankruptcy proof of claim on behalf of EPA with the United States Bankruptcy Court for the Southern District of Texas, Corpus Christi Division in the ASARCO Chapter 11 bankruptcy.
  • In March 2008, the Bankruptcy Court approved the process by which ASARCO would pursue the selection of a plan sponsor and sale of its operating assets.
  • After a bidding process for the purchase of ASARCO’s assets, Sterlite (USA), Inc. on May 30, 2008, executed a purchase and sales agreement in the amount of $2.6 billion for ASARCO’s assets. After the purchase and sales agreement was executed, copper prices began to decline, and on October 14, 2008, Sterlite representatives informed the United States Bankruptcy Court that the company could not honor the contract.
  • The Debtor and Sterlite, were able to execute another purchase and sales agreement in March 2009.
  • On June 5, 2009, the Bankruptcy Court approved five settlement agreements which provided recovery on environmental claims at numerous Superfund sites throughout the country. See section on settlement agreements below
  • On November 13, 2009, the District Court for the Southern District of Texas, Corpus Christi Division accepted the Bankruptcy Court’s Recommendation to confirm the Parent Plan.