* Grupo Mexico and Sterlite go to court in Asarco case
* Judge says will consider environmental, labor issues
* Decision expected by month's end
By Jazmine Ulloa
BROWNSVILLE, Texas, Oct 19 The judge who will decide the fate of bankrupt U.S. copper miner Asarco LLC said on Monday he would look at financial, environmental and labor issues in making a decision on which suitor will gain control of the company.
U.S. District Court Judge Andrew S. Hanen was presiding over a six-hour face-off in a Texas court on Monday between India's Sterlite Industries STRL.BO and Mexican miner Grupo Mexico SAB de CV (GMEXICOB.MX) who have each been trying to take control of Asarco for over a year.
Hanen is expected to decide by the end of the month whether to accept a U.S. bankruptcy judge's recommendation that Grupo Mexico regain control of Asarco, which runs three copper mines in Arizona.
U.S. Bankruptcy Judge Richard Schmidt has twice recommended that the District Court approve Grupo Mexico's offer for the company, saying the plan would repay Asarco's creditors in full, preserve its equity value, and possibly amount to one of the "most successful major bankruptcy reorganizations in history."
However, Grupo Mexico's bid is opposed by Asarco's labor union, and some environmental creditors, who do not have agreements with the Mexican miner.
Judge Hanen on Monday urged Grupo Mexico to reach a labor agreement with its union.
"That does not mean you will sit down with the union, singing Kumbaya ... But maybe since July, no one has really sat down and really crunched these things down," he said to the room packed with lawyers representing secured creditors, asbestos litigants and representatives of U.S. environmental agencies.
Sterlite has made numerous attempts to sweeten its offer for Asarco -- as part of its latest $2.565 billion offer it said it would let Grupo Mexico out of an $8 billion potential legal liability stemming from the 2003 transfer of Asarco's stake in Peruvian miner Southern Copper Corp PCU.N.
But in September Judge Schmidt recommended the District Court in Brownsville reject the sweetened bid in favor of Grupo's $2.4799 billion offer, saying it was too late for Sterlite to make changes to its offer.
"Considering the volatile commodities market and world economy, time is of the essence in moving this case toward confirmation and consummation," Schmidt wrote in court papers.
Grupo Mexico, the largest copper miner in Mexico, acquired Asarco in a leveraged buyout in 1999 but lacks board control due to the bankruptcy.
Schmidt had first endorsed Grupo's bid in August, saying that it would offer more recovery to Asarco's creditors than Sterlite's plan.
Sterlite, part of London-listed Vedanta Resources (VED.L), has argued its plan is better for the company and its offer has the support of Asarco and Asarco's union. Grupo Mexico does not yet have a labor agreement with the union, which has said it may strike if they cannot reach a deal.
Grupo has been fighting to take back Asarco since the company filed for bankruptcy in 2005 amid a worker strike and more than $1 billion of asbestos and environmental claims.
The Mexican miner group said in a statement in September that it was "extremely pleased" with Judge Schmidt's recommendation, and that Asarco should be able to exit bankruptcy protection by the end of the year.
The cases are In re: Asarco LLC, U.S. Bankruptcy Court, Southern District of Texas, No. 05-21207 and In re: Asarco LLC, U.S. District Court, Southern District of Texas, No. 09-00177.