UPDATE 1-Grupo Mexico raises Asarco bid to $2.2 bln in cash

*Grupo raises offer for Asarco to $2.2 billion

*Says offer allows for full repayment of certain claims

*Confirmation hearings continue in bankruptcy court

By Emily Chasan

NEW YORK, Aug 17 (Reuters) - Mexican miner Grupo Mexico SAB de CV (GMEXICOB.MX) said on Monday it was offering $2.2029 billion in cash to regain control of bankrupt U.S. copper miner Asarco LLC.

In documents filed with the U.S. bankruptcy court in Corpus Christi, Texas, Grupo Mexico said its offer would include full repayment of administrative, priority, secured and asbestos personal injury claims, as well as payment in full on general unsecured claims.

Asarco, which sought bankruptcy protection in 2005 amid a worker strike and more than $1 billion of environmental damage and asbestos claims, began the second week of confirmation hearings for its reorganization plan in U.S. bankruptcy court on Monday.

The hearings are the final stage in a year-long tussle between Grupo Mexico and India's Sterlite Industries (India) Ltd (STRL.BO) for the right to sponsor Asarco's bankruptcy exit plan and take control of Asarco.

Grupo Mexico acquired Asarco in a leveraged buyout in 1999 but lacks board control of the company due to the bankruptcy.

Sterlite had made a $2.6 billion offer for Asarco in May 2008, but backed out of that deal in October, saying it needed a substantial reduction in price after the copper markets dropped. That led to a renegotiation, and new offers from both suitors.

Last week, Sterlite, an affiliate of London-listed Vedanta Resources PLC (VED.L), and Grupo Mexico had both raised their revised offers to $1.67 billion and $2 billion, respectively. [ID:nN10469983]

A key issue for Grupo Mexico in the case is a federal court decision in April that found Grupo Mexico had made a "fraudulent transfer" of Asarco's stake in Peruvian miner Southern Copper Corp PCU.N in 2003.

Asarco says the award from the suit is worth around $7.5 billion. Grupo Mexico, which is appealing the ruling, would be let out of that judgment if it regained control of Asarco.

Grupo Mexico said the higher bid also includes $280 million in notes for the reorganized of Asarco, and if its bid were successful it would also pursue litigation against Sterlite for backing out of its earlier offer.

A representative for Asarco was not immediately available to comment on the revised bid. (Reporting by Emily Chasan; additional reporting by Phil Wahba, editing by Gerald E. McCormick)