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Tucson-based Asarco LLC, a bankrupt copper producer, may sell its assets to India's Sterlite Industries Ltd. for at least $2.6 billion in an auction this year, a judge ruled Tuesday.

The decision set up a competition between Sterlite and Asarco parent Grupo Mexico SAB.

Sterlite's leading bid will be compared with a reorganization plan backed by Grupo Mexico, in which creditors would get 100 cents on the dollar. Whichever proposal is better for creditors will be approved by U.S. Bankruptcy Judge Richard S. Schmidt in Corpus Christi, Texas, the judge said.

"We're going to get both plans on track," Schmidt said in court. "It is not going to be a race to confirmation. It is going to be an orderly process."

Asarco ranked 20th among Southern Arizona's biggest employers this year, with 2,135 full-time-equivalent positions, according to the Star 200 survey. The company operates the Mission mine, near Sahuarita; the Silver Bell mine, near Marana; and the Ray mine, near Kearny, as well as a smelter at Hayden.

After the bankruptcy filing, Asarco, with headquarters at 5285 E. Williams Circle, was placed under the control of the court. Since then, it has been run by an independent board of directors — and has been out of the control of Grupo Mexico.

Asarco's directors sued the Mexican parent company and began a process to sell Asarco's assets under court supervision.

After the company signed a labor contract with its workers, the union became an ally.

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On Tuesday, Schmidt also approved a $52 million breakup fee for Sterlite, which will be the so-called stalking-horse bidder. Sterlite may receive the fee if a competitor wins the auction by offering more than $2.6 billion and Asarco agrees to let that winner propose a reorganization plan, Schmidt said.

Luc Despins, an attorney for Grupo Mexico, said in court that the company plans to appeal Schmidt's ruling. Grupo Mexico has long opposed Asarco's plans for the auction. Before Schmidt ruled, Despins urged him to give Grupo Mexico the chance to propose a reorganization plan should the judge rule in favor of Asarco and allow the auction.

Typically, only the company in bankruptcy is allowed to propose such a plan. Schmidt agreed to allow both Asarco and another unit of Grupo Mexico to file competing reorganization plans.

Asarco has said it will file a plan that raises money to pay creditors through the auction, while Grupo Mexico has said it will propose using its own cash as well as the almost $1 billion Asarco has earned by selling copper to pay creditors, who are estimated to be owed as much as $5.3 billion.

Asarco and Grupo Mexico will need to work out a joint disclosure statement that describes the two plans in enough detail for creditors to vote on them before Schmidt makes a final ruling.

If Asarco's plan prevails, Grupo Mexico would lose its ownership of the company, and Asarco would continue its lawsuit against its parent.

Asarco is suing Grupo's U.S. subsidiary, Americas Mining Corp., alleging fraudulent transfer of Asarco's majority share in two Peruvian copper mines and related facilities. That case went to trial in Brownsville, Texas, last month and is awaiting a judge's ruling. Asarco contends that the loss of that revenue led to its 2005 bankruptcy.