May 31 (Bloomberg) -- Sterlite Industries (India) Ltd., the nation's biggest copper and zinc producer, agreed to buy assets of bankrupt Asarco LLC for $2.6 billion in its first acquisition in North America.

The company will use debt and cash to buy three open-pit mines and a smelter in Arizona, a copper-refiner, rod and cake unit and a precious metals plant in Texas, Mumbai-based Sterlite said in an e-mailed statement today.

Sterlite was one of four companies competing to buy assets of Tuscon, Arizona-based Asarco. Copper climbed to a record in April and producers are pursuing takeovers as surging costs make it cheaper to acquire rivals than build mines. Xstrata Plc, the world's fourth-largest producer of the metal, has spent more than $27 billion on acquisitions since 2002.

``Prices of all raw materials have risen to a record and any company planning an expansion wants to first secure raw material supplies,'' said Jayesh Shroff, who helps manage $7.2 billion at SBI Asset Management Co. in Mumbai, including 3 million Sterlite shares. ``Assets that are fully integrated are sought after.''

Copper for delivery in three months gained 0.6 percent to $7,935 a ton yesterday on the London Metal Exchange. The metal may average $8,277 a ton this year, 21 percent higher than the previous estimate, JPMorgan Securities Ltd. said this month.

Net Cash

Sterlite and its U.K.-based parent Vedanta Resources Plc are among miners which are benefiting from a six-year rally in copper prices. The company, whose shares have more than doubled in each of the past five years, had 120 billion rupees ($2.8 billion) in net cash on March 31, according to its earnings statement.

Vedanta, which owns 79.25 percent of Sterlite, is controlled by billionaire Anil Agarwal. Sterlite jumped 4 percent to 936.5 rupees at close yesterday, valuing the company at $15.7 billion. Its American depositary receipts gained 3 percent to $22.14.

Asarco, the third-largest producer in the U.S., owns mines that hold about 5 million metric tons of copper resources. The 100-year-old company produced 235,000 tons of refined metal last year and had revenue of $1.9 billion, according to the statement.

The purchase must be approved by the U.S. Bankruptcy Court, Southern District of Texas, Sterlite said.

The transaction may be challenged by Grupo Mexico SA, which controlled Asarco before it filed for bankruptcy protection in 2005 because of liabilities linked to environmental damage, the Wall Street Journal reported, citing people it didn't identify.

ABN Amro Holding NV advised Sterlite on the purchase, while Asarco hired Lehman Brothers Holdings Inc.

To contact the reporters on this story: Cherian Thomas in New Delhi at Cthomas1@bloomberg.net;

Last Updated: May 31, 2008 07:41 EDT