The acquisition of copper miner Asarco LLC for $2.6 billion by India-based Sterlite Industries Ltd. is in doubt after Sterlite said it was backing out of the deal.

Lawyers for Asarco told a federal bankruptcy judge in Texas on Tuesday that Sterlite “cannot and will not” close the sale unless Asarco agrees to a price reduction.

A statement released late Tuesday by Asarco said Sterlite has not alleged that the purchase agreement it signed in May is unenforceable or that it lacks cash to close the deal. Asarco President and Chief Operating Officer Jo seph Lapinsky said the company was reserving its rights under the agreement.

Sterlite is a subsidiary of a London metal and mining group, Vedanta Resources.

Asarco said it was told by Sterlite that recent world economic events affecting credit markets have affected its expected financing for operations and acquisitions. Falling copper prices also have dimmed Sterlite’s willingness to close the deal.

Asarco LLC owns a shuttered copper refinery in El Paso, but it was not part of the purchase agreement.

Asarco wants the El Paso smelter placed in an environmental custodial trust if no qualified buyer emerges, according to a statement issued by Asarco officials in July.

Such a trust would allow Asarco to address environmental issues in El Paso, and would be operated by a third party and supervised by regulatory agencies.

Copper has fallen from a per-pound high above $4 in July to about $2.30 this week.

Asarco is in the midst of a bitter battle with its former parent company, Grupo Mexico SAB, over actions its says stripped it of its best assets and left it with huge liabilities that led to its 2005 bankruptcy filing.

Aug. 30, U.S. District Judge Andrew Hanen in Browns ville, Texas, ruled Grupo Mexico subsidiary Americas Mining breached its responsibility to Asarco’s creditors by transferring Asarco’s stock ownership in Southern Peru Copper.

Asarco seeks more than $10 billion in damages and stock shares after the judge ruled that Americas breached its fiduciary duties. Americas contends no stock should be returned and far less cash should be awarded.

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