Helenair.com - Asarco Agrees to Cleanup Deal
By Eve Byron
Asarco has agreed to pay $148 million to clean up industrial and mining sites in Montana, with the bulk of the proposed settlement $105 million going toward environmental damage in and around East Helena.
The deal is part of a $273.8 million agreement announced Thursday that covers sites in 16 states, and is part of Asarco's bankruptcy reorganization plan. The agreement still needs the approval of U.S. Bankruptcy Court Judge Richard Schmidt in Texas, and will probably be challenged by international mining giant Grupo Mexico, which owns Asarco.
Still, Attorney General Mike McGrath and others contacted Thursday said they're thrilled with the agreement.
"This is a full settlement of our claims, because Asarco now is doing quite well financially with the price of copper," McGrath said. "Typically, when you come out of bankruptcy, you're paying pennies on the dollar (owed). But with the price of copper at $4 a pound, Asarco is making a lot of money. Some people are arguing they're not even in bankruptcy."
Joseph Lapinsky, Asarco's president and chief executive officer, said in a statement that this plan will allow the company to emerge from bankruptcy in a manner that's fair to all, and puts Asarco's assets under ownership of a "world-class global mining company."
"We acknowledge the hard work over many months by all the parties in the bankruptcy case to achieve this significant result," Lapinsky said. "While we still need court approval of our plan, we believe the end of this complex bankruptcy finally is in sight."
Rob Collins, assistant attorney general in Montana's Natural Resource Damage Program, said the $100 million earmarked for East Helena should cover the cost of dealing with contaminated soils on Asarco-owned property left over from a century of lead smelting at the Asarco site, plus tainted groundwater.
Asarco already has spent more than $100 million on environmental cleanups in the community, with most of that work focused on privately owned land and yards. The company is in negotiations on the settlement terms with the EPA over the final clean-up of those private properties. Those costs are estimated to be an additional $13.2 million, which isn't a part of this settlement.
But this new agreement would also pay for cleaning up large swaths of Asarco-owned land that forms a semi-circle around the community, according to Mary Capdeville, another assistant attorney general for Montana.
High levels of lead and arsenic on those soils has prevented expansion of East Helena for decades. The thought that Asarco may finally pay to get those lands cleaned thrills East Helena Rep. Jill Cohenour.
"I'm just shocked. That's incredible," Cohenour said on Thursday. "What a wonderful deal for the community, to get this settled and be able to move forward, to finally have the possibility of economic development for those lands. This is a major development that everyone has been waiting and waiting for because you can't invite business in when you don't know what's going to happen. I couldn't be more pleased."
The funds also would be used to institute plans to stop the off-site migration of groundwater laden with arsenic and selenium that's moving from the Asarco site toward the Helena Valley.
Groundwater in the plume under the plant site has as much as 22,900 times the federal drinking water standard for arsenic; federal officials say consuming less than two 8-ounce glasses of water with arsenic at this amount would kill an adult. It's less dangerous off site, but one test well recently showed up to 1,100 times the federal drinking water standard.
Lands contaminated by Asarco in the East Helena area were listed as a Superfund site in September 1984. Asarco already has spent more than $100 million to replace residential yards and undertake other cleanup efforts.
Other Asarco sites in Montana that would benefit from the settlement announced Thursday include an additional $10 million for the Mike Horse dam site; $17.5 million for the Black Pine mining district northwest of Phillipsburg; and $1.9 million for the Iron Mine site north of Superior.
Those funds would be put into a "custodial trust," whose trustee will use the money as directed by state and federal agencies.
An additional $5 million earmarked for East Helena will go directly to the state to compensate for natural resource damages.
"This is a special state trust fund just for restoration projects for East Helena and the valley area," Collins said. "It would pay for things like wildlife improvement projects, perhaps acquisitions for recreational purposes, like establishing fishing sites."
The proposed settlement is in addition to a $37 million settlement announced earlier this year to remove the aging Mike Horse Dam on the Upper Blackfoot River near Lincoln, and $8.1 million to fund the cleanup of the Barker Hughesville mine site in Cascade and Judith Basin counties.
The bankruptcy court will hold a hearing on Sept. 23 to consider approval of the disclosure plan, with a hearing slated for Nov. 17 to deal with the reorganization plan.
Asarco was bought by Grupo Mexico in 1999, which temporarily closed the East Helena site in 2001. The company filed for bankruptcy protection in 2005.
An internal rift arose amid allegations by some Asarco officials that Grupo Mexico was selling off Asarco's assets, to leave only a shell of a company with billions of dollars in environmental liabilities that taxpayers would have to cover.
So the judge appointed two creditors to a three-member Asarco board of directors, along with a representative of Grupo Mexico. It's that board, known as Asarco LLC, which agreed to the settlement with state and federal agencies.
That board also has agreed to the sale of Asarco to Sterlite, a subsidiary of an Indian mining company. Sterlite said it would buy Asarco's operating properties in Arizona and Texas for about $2.6 billion.
McGrath said that with those funds and additional cash on hand, Asarco will pay creditors, leaving about $1.65 billion for its environmental claims, which are estimated at between $1 billion and $25 billion, depending on who is doing the accounting.
Grupo Mexico is fighting the proposed sale.
Asarco's property in Montana probably would fall under the control of the custodial trust, which would sell many of those lands after the lead, arsenic and other contaminants that have prohibited development have been removed.
However, at the East Helena smelter site, all of the buildings are being torn down and most of the debris is going into a lined landfill, and that property probably wouldn't be resold.