In what some analysts see as a battle for its life, Mexico's largest mining company Grupo Mexico is offering billions of dollars to regain control of the bankrupt Asarco LLC.

Americas Mining Corp., a U.S. subsidiary of the Mexico City-based conglomerate, submitted a reorganization plan with U.S. Bankruptcy Court in Corpus Christi, Texas late Tuesday that would provide up to $2.7 billion in cash as well as a $440 million guarantee to assure payment of all allowed creditor claims, including payment of liabilities relating to asbestos and environmental claims.

The fate of Asarco has major implications for Grupo Mexico, which purchased the 109-year-old mining company in 1999.

On July 31, the state of Montana announced a $143 million agreement with Asarco for environmental cleanup as part of its bankruptcy reorganization plan. About $100 million of that sum was to clean up contamination in East Helena -- where the company for a century operated a now defunct lead smelter.

Grupo Mexico temporarily closed the East Helena Asarco smelter in 2001, and it has remained closed since.

Montana Attorney General Mike McGrath said the July agreement, subject to approval in U.S. Bankruptcy Court, would provide $100 million to clean up contaminated soil and groundwater in East Helena, and money to address mining contamination at Asarco property elsewhere in the state.

Meanwhile, a federal judge in Brownsville, Texas, is expected to rule in the next month on a lawsuit brought against Grupo Mexico's Americas Mining Corp. by Asarco, alleging fraudulent transfer of Asarco's share in two Peruvian copper mines.

Asarco claims that the loss of income from those properties crippled operations at the Southern Arizona mines, resulting in slowed production, lack of proper equipment and a frustrated workforce that eventually went on a four-month strike in 2005.

The damage from the income loss was magnified by low copper prices, which were $1.65 per pound when Asarco filed for bankruptcy protection in August 2005.

Today, the metal is selling for around $3.50 per pound. In February 2007, Asarco filed the fraud lawsuit and is seeking $11.3 billion in damages. If Grupo succeeds in getting Asarco back, it could move to dismiss the lawsuit.

"It would be a very bad situation -- the worst, worst scenario" for Grupo to lose in both courts, said analyst Rodrigo Heredia of IXE Grupo Financiero in Mexico City, who recommends buying shares.

Grupo's stock reached a 16-month low Aug. 12, mainly because of uncertainty over the bankruptcy case and a yearlong strike at its mine in Cananea, Sonora, Heredia said. Grupo Mexico's shares would be further hurt should the company lose both court battles, Morgan Stanley analyst Carlos De Alba said.

During four weeks of testimony in Brownsville, Asarco lawyers said that when Grupo removed the Peruvian assets from Asarco, the copper company was already insolvent. Under federal law designed to protect creditors, once a company enters a "zone of insolvency" before a bankruptcy, an owner can't strip it of assets.

The fact that Grupo could not prove Asarco's solvency at trial is "damning" against Grupo Mexico, bankruptcy lawyer Charles Tatelbaum, who's not involved in the litigation, said in an interview with Bloomberg News.

The Mexican company "has a very significant problem" if Asarco presented the facts accurately, said Tatelbaum, of Adorno & Yoss in Fort Lauderdale, Fla., who represented creditors in the Enron Corp. and WorldCom Inc. bankruptcies.

Asarco wants the bankruptcy court to allow India-based Sterlite Industries Ltd., to purchase Asarco's operating assets.

Asarco would then pay outstanding environmental claims and creditors with proceeds from the sale, according to court filings.

Sterlite, a subsidiary of London-based Vedanta Resources, made a $2.6 billion bid for Asarco on May 31. Sterlite officials have said they intend to invest in equipment and double the company's copper production. Grupo believes it would be unfair to lose a company it already owns.

"We own 100 percent of Asarco's equity and believe that the certainty and superior value offered by our reorganization plan should accord us the right to retain Asarco," a spokesman for Grupo Mexico said in an e-mail Wednesday. The bankruptcy court is expected to make a decision this fall on which reorganization plan is best for creditors.

Workers at Asarco's three open-pit mines, a smelter and refinery, are hoping the court won't let Grupo anywhere near Asarco again, said Manny Armenta, a sub-district director for the United Steelworkers union.

He said the union has been lobbying politicians and federal officials to oppose Grupo's plan to regain Asarco.

"We believe we have a fair justice system in the United States," Armenta said Wednesday. "It would be an injustice to let them come back."

Copies of the reorganization plans for ASARCO and Grupo are available.

IR reporter Eve Byron and The Associated Press contributed to this story.