Mumbai: Sterlite Industries (India) Ltd, a subsidiary of London-based metal and mining conglomerate Vedanta Resources plc, has agreed to acquire Asarco LLC, a Tucson, US-based mining, smelting and refining company, for $2.6 billion (about Rs11,000 crore), in cash.

Sterlite will finance the acquisition of Ascaro's operating assets through a mix of debt and existing cash resources. 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 acquisition will be 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, the company said in a press release.

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 United States. It produced 235,000 tonnes of refined copper in 2007.

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

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

''This is in line with our stated strategy of leveraging our established skills. We are extremely pleased with this agreement,'' said Asarco's president and chief executive Joseph F Lapinsky.

''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, adding, ''The sale will achieve the overall best value for Asarco, its employees, creditors and the local communities in which we operate.''

Sterlite said it considers Asarco as a logical and strategic fit with its existing copper business and expects to derive significant long-term value for all stakeholders through: 

a) Leveraging Sterlite's proven operational and project skills to develop and optimise Asarco's mines and plants;

b) Access to attractive mining assets with long life; and

c) Geographic diversification in the North American market; and stable operating and financial platform for Asarco.

The sale agreement, signed early this week, followed a long-drawn sponsor selection process beginning April,  in which Sterlite and several other entities participated, the release said.

Sterlite said the selection process has been overseen by Asarco's creditors and approved by the US bankruptcy court for the southern district of Texas. An independent court-appointed examiner also closely observed the bidding process, it said.

ABN Amro Corporate Finance, a part of the RBS Group, acted as financial advisor and Shearman & Sterling acted as legal advisor to Sterlite in the transaction.

Lehman Brothers acted as financial advisor and Baker Botts acted as legal advisor to Asarco.

The agreement is subject to the approval of the US bankruptcy court in Texas, and the sale will conclude Asarco's bankruptcy case, the statement said.

Sterlite, a subsidiary of London-based Vedanta Resources plc, is India's largest non-ferrous metals and mining company with interests and  operations in aluminum, copper and zinc and lead. Vedanta, controlled by billionaire Anil Agarwal, owns 79.25 per cent of Sterlite.

Sterlite, which has copper smelters and refineries in India, operates Hindustan Zinc Limited for its zinc and lead operations; Copper Mines of Tasmania Pty Limited for its copper operations in Australia; and Bharat Aluminum Company Limited for its aluminum operations.

The company is in the process of setting up a 2,400MW independent power plant through its wholly owned subsidiary, Sterlite Energy Limited.

Sterlite is listed on the Bombay Stock Exchange and National Stock Exchange in India and the New York Stock Exchange in the US.

Asarco is an integrated copper mining, smelting and refining company with approximately 2,600 employees. The company operates mines, mills and a smelter in Arizona and a smelter and refinery in Texas.