Mining concern Grupo Mexico (GMEXICO.MX) said Tuesday it could save $200 million in synergies if a bankruptcy judge's recommendation that would give it back control of U.S. unit Asarco LLC is confirmed.

Judge Richard S. Schmidt of the U.S. Bankruptcy Court in Corpus Christi, Texas, recommended Grupo Mexico's plan to bring Asarco out of bankruptcy proceedings, rejecting a rival offer from Vedanta Resources Plc (VED.LN).

Schmidt said Grupo Mexico's $2.48 billion plan to bring Asarco out of Chapter 11 was "superior" to the $2.19 billion offer from Vedanta. Grupo Mexico owns Asarco but lost control after the company entered Chapter 11 in 2005.

Because the case involves large asbestos liabilities, the recommendation has to be confirmed by a higher court, in this case U.S. District Court Judge Andrew Hanen in Brownsville, Texas.

Grupo Mexico said confirmation would "allow Asarco to emerge from bankruptcy considerably stronger as part of a global mining conglomerate that will stand among the world's leaders."

Asarco would contribute 200,000 tons of copper production, bringing Grupo Mexico's capacity to 870,000 tons a year with an average production cost of 72 U.S. cents per pound. It would also have the world's largest proven copper ore reserves, the company said.

"Grupo Mexico also anticipates achieving overall synergies of $200 million through the integration of Asarco," the company added.

Asarco and its key creditors supported the Vedanta buyout plan. The United Steelworkers, Asarco's largest labor union, threatened to strike if the Arizona-based company is returned to its Mexican parent.

Grupo Mexico reiterated an offer to extend the collective bargaining agreement to June 2011 "under the same terms and conditions as the current contract."

Grupo Mexico also operates mines in Mexico and Peru. The Cananea mine in northwestern Mexico has been shut by a strike since July 2007, and the company is in a legal battle with the Mexican mining workers union in an attempt to reopen it.

The company acquired a 54% stake in Southern Copper Corp. (PCU), formerly Southern Peru Copper, when it bought Asarco in 1999. It later merged its Peruvian and Mexican mining operations, increasing its stake in Southern Copper.

Grupo Mexico said Tuesday that if the bankruptcy court's recommendation is confirmed, it would also be released from liabilities in litigation in Brownsville, where the court ruled in April that the transfer of the Southern Copper stake was fraudulent and that Grupo Mexico should return shares to Asarco and pay other compensation.

-By Anthony Harrup, Dow Jones Newswires; (5255) 5001 5727, anthony.harrup@dowjones.com

   (David McLaughlin and Marie Beaudette contributed to this report)
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