Sterlite Asarco Deal

Environmental legislations related to the Asarco case:

The environmental legislations played an important role in the bankruptcy declaration of Asarco as the company’s environmental liabilities were the main reason for seeking bankruptcy protection. Asarco’s environmental liabilities were estimated to be around $1 billion and the final settlement was $1.79 billion paid by the parent company, Grupo Mexico. In 2003, the Department of Justice issued a restraining order so that Asarco could not sell of the company’s assets and avoid paying up for the environmental damages. The whole environmental contamination issue illustrates the inadequacy of the 1872 Mining Law which never underwent any major reform since its enactment.[1]

Asbestos-exposure claims:

Arsenic, lead and other toxic pollutants from Asarco’s smelter were found to be the cause of soil and ground water contamination (El Paso site and Rio Grande water contamination). Asbestos-related personal injury claims were also a major part of the environmental liabilities.[2]

A landmark case in the asbestos-exposure claims is that of Johns Manville. Asbestos was touted as the “miracle mineral” because adding it to various materials created products that were economical, durable, waterproof and, in particular, fire resistant. It was only in the 1960s and 1970s that new studies brought to light the health risks associated with manufacturing and using asbestos products. As a result of this, the company became a defendant in a number of legal actions, and in August 1982, filed for protection under Chapter 11 of the U.S. Bankruptcy Code. After successfully emerging from bankruptcy in 1988, the Manville Personal Injury Settlement Trust was established by the U.S. Bankruptcy Court to provide a fair and systematic way of handling health claims. JM exited the asbestos business completely by the end of 1985, reorganizing around new product lines and instituting health and safety measures.[3]

US environmental...