Southern Copper Corp.

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BROWNSVILLE, Texas — Grupo Mexico SAB should be stripped of control over Southern Copper Corp. because the stake was acquired in a fraudulent sale, a lawyer who is seeking about $10.5 billion in damages from the company said at the start of a federal trial.

A judge in Brownsville, Texas, must decide whether one Grupo unit, Americas Mining Corp., robbed creditors of another unit, Asarco LLC, of Southern Copper’s value in 2003. G. Irvin Terrell, an Asarco attorney, said today that the deal favored a group of creditors that included Mexico’s richest man, Carlos Slim, over others, such as asbestos victims.

Asarco is “not responsible for the bad acts of Grupo and its subsidiaries,” Terrell told U.S. District Judge Andrew Hanen.

Asarco, based in Tucson, Arizona, is suing Americas Mining to undo the 2003 sale of 54 percent of Southern Copper’s shares for $775 million. Asarco claims Grupo Mexico forced it to sell the stake at a discount as part of a conspiracy to strip the unit of assets and leave it with billions of dollars in environmental and asbestos claims.

Brian Antweil, an attorney for Americas Mining, denied the allegations. Asarco, in bankruptcy since 2005, is under the control of an independent board appointed by U.S. Bankruptcy Judge Richard S. Schmidt in Corpus Christi, Texas. Grupo Mexico still owns Asarco and is fighting to regain control.

“The creditors have no claim,” Antweil told Hanen. “It’s not a case about an evil empire. It’s not a `Godfather’ story. There are no secrets in this case.”

Under bankruptcy rules, the judge may order the shares returned to Asarco if he agrees that Mexico City-based Grupo Mexico forced the sale to keep the stake away from creditors.

Antweil said Asarco’s financial troubles five years ago stemmed from a miners’ strike, rising operating costs and depressed copper prices. Copper has surged more than fivefold since April 2003.

Terrell, who won a $10.5 billion judgment against Texaco Inc. in the 1980s on behalf of Pennzoil Co., said in an interview that Grupo Mexico may face damages of the same amount.

One question for Hanen is whether some creditors were unfairly paid. Terrell said a bank controlled by Carlos Slim agreed to loan Americas Mining $310 million only because Grupo Mexico forced Asarco to repay $100 million in unsecured bonds owned by the billionaire ahead of other creditors, including the U.S. government. Antweil dismissed that claim as a “red herring.”

“There is no evidence of a handshake deal” between Slim and Grupo Mexico Chairman German Larrea, Antweil said in court. The bank, Grupo Financiero Inbursa SA, declined to comment in an e-mail to Bloomberg News.

Grupo required Asarco to use $50 million from the Southern Copper sale and to cash in insurance policies to raise $50 million more to pay off the bonds, according to court documents. Asarco said the transactions left it with no cash from the Southern Copper sale and cost it insurance policies now needed to cover certain claims.