South American mining giant Grupo Mexico today said it has regained control of US copper mine Asarco after it won an year-long legal battle with Vedanta group firm Sterlite for acquiring the bankrupt company.

US district judge Andrew Hanen in Brownsville, Texas ruled in favour of Grupo Mexico's $2.5 billion reorganisation plan for Asarco, saying it "is both feasible and confirmable," and rejected a competing offer from Sterlite Industries (India) Ltd. (See: Sterlite trumps Grupo Mexico with a $2.565 billion bid for Ascaro).

A lower court that oversaw Asarco's case for five years, had ruled in favor of Grupo Mexico.

Like Grupo Mexico, Sterlite had also offered to spend over $2.5 billion to reorganise Asarco and make payments to Asarco's creditors, but the judge found more cash in Grupo Mexico's offer, which, he said, could help pay creditors in full.

Under the reorganisation plans, Manuel Ramos, currently Asarco's vice president of metallurgical operations, will become chief executive and treasurer Oscar Gonzalez Barron will become chief financial officer.

Asarco has approximately 1,500 unionised workers and about 1,000 nonunion employees. Hanen has asked Grupo Mexico to make a comprehensive contract proposal to the union by 15 January.

Grupo is making a $2.2 billion cash contribution to Asarco and is distributing about $1.4 billion in cash Asarco already has to creditors. Grupo Mexico is also guaranteeing a $280 million note to asbestos creditors.

"With Asarco now able to operate free of its burdensome asbestos and environmental liabilities, which will be fully satisfied under our plan, we believe the combined entity will create one of the world's strongest and most competitive copper producers," Jorge Lazalde, vice president and general counsel of Asarco Inc, said in a statement.

Grupo, Mexico's largest miner, said Asarco would help the company diversify its geographic profile and boost its overall copper production by 30 per cent.

Grupo Mexico, which bought Asarco in 1999, lost control of the mine in 2005 after it failed to meet costs for asbestos claims and environmental cleanup at its abandoned mines and refineries in Western US.

Plunging copper prices and a strike against its Arizona mines finally forced the management to file for bankruptcy protection and Grupo Mexico to lose control of its subsidiary

Grupo said it had obtained $1.5 billion of financing from a syndicate of financial institutions, including Banco Inbursa, BBVA Bancomer, Calyon and Credit Suisse, for the Asarco deal. Grupo itself has put in $700 million to fund the plan.