ASARCO INC, 424B5, 1994-10-27

ASARCO INC
424B5, 1994-10-27
PRIMARY SMELTING & REFINING OF NONFERROUS METALS

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<PAGE> 1
Filed pursuant to Rule 424(b)(5)
Registration No. 033-55993

THIS PROSPECTUS SUPPLEMENT RELATES TO AN EFFECTIVE REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933, AND IS SUBJECT TO COMPLETION OR
AMENDMENT. THIS PROSPECTUS SUPPLEMENT SHALL NOT CONSTITUTE AN OFFER TO SELL
OR THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE
SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE
UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS
OF ANY SUCH STATE.

SUBJECT TO COMPLETION, DATED OCTOBER 27, 1994

PROSPECTUS SUPPLEMENT TO PROSPECTUS DATED OCTOBER 25, 1994
9,500,000 Shares
ASARCO Incorporated
Common Stock
(No par value)

------------------

All the shares of Common Stock, no par value ("Common Stock"), of ASARCO
Incorporated ("Asarco" or the "Company") offered hereby are being sold by
M.I.M. Holdings Limited ("MIM" or the "Selling Stockholder"). Of the
9,500,000 shares of Common Stock being offered, 6,650,000 shares are
initially being offered in the United States and Canada (the "U.S.
Shares") by the U.S. Underwriters (the "U.S. Offering") and
2,850,000 shares are initially being concurrently offered
outside the United States and Canada (the "International
Shares") by the Managers (the "International Offering"
and, together with the U.S. Offering, the "Offerings").
The offering price and underwriting discounts and
commissions of the U.S. Offering and the
International Offering are identical.
The Company will not receive any
of the proceeds of the Offerings.

The Common Stock is listed on the New York Stock Exchange under the symbol "AR".
On October 26, 1994, the reported last sale price of the Common Stock on the
New York Stock Exchange Composite Tape was $31 3/8 per share.

------------------

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS
THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS SUPPLEMENT OR THE PROSPECTUS. ANY REPRE-
SENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.

<TABLE>
<CAPTION>
Underwriting Proceeds to
Price to Discounts and Selling
Public Commissions Stockholder(1)
---------------- ---------------- ----------------
<S> <C> <C> <C>
Per Share.................................... $ $ $
Total(2)..................................... $ $ $
</TABLE>

(1) Before deduction of expenses, half payable by the Company and half payable
by the Selling Stockholder, estimated at $ .
(2) The Selling Stockholder has granted the U.S. Underwriters and the Managers
an option, exercisable by CS First Boston Corporation for 30 days from the
date of this Prospectus Supplement, to purchase a maximum of 853,363
additional shares of Common Stock to cover over-allotments of shares. If the
option is exercised in full, the total Price to Public will be $ ,
Underwriting Discounts and Commissions will be $ , and Proceeds to
Selling Stockholder will be $ .

------------------

The U.S. Shares are offered by the several U.S. Underwriters when, as and
if delivered to and accepted by the U.S. Underwriters subject to their right to
reject orders in whole or in part. It is expected that the U.S. Shares will be
ready for delivery on or about , 1994.

CS First Boston S.G.Warburg & Co. Inc.

The date of this Prospectus Supplement is , 1994.
<PAGE> 2

IN CONNECTION WITH THIS OFFERING, CS FIRST BOSTON CORPORATION ON BEHALF OF THE
U.S. UNDERWRITERS AND THE MANAGERS MAY OVER-ALLOT OR EFFECT TRANSACTIONS WHICH
STABILIZE OR MAINTAIN THE MARKET PRICE OF THE COMMON STOCK AT A LEVEL ABOVE THAT
WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH TRANSACTIONS MAY BE
EFFECTED ON THE NEW YORK STOCK EXCHANGE OR OTHERWISE. SUCH STABILIZING, IF
COMMENCED, MAY BE DISCONTINUED AT ANY TIME.

[PHOTOGRAPH: AERIAL VIEW OF RAY MINE]

[PHOTOGRAPH: AERIAL VIEW OF MISSION MINE]

<PAGE> 3

PROSPECTUS SUPPLEMENT SUMMARY

This summary is qualified in its entirety by the more detailed information
included elsewhere in this Prospectus Supplement and the accompanying
Prospectus.

THE COMPANY

Asarco is one of the world's leading producers of nonferrous metals. The
principal metals Asarco produces are copper, lead, zinc, silver and gold. Asarco
also produces specialty chemicals and minerals and provides environmental
services. Asarco has substantial equity interests in three mining companies:
52.3% in Southern Peru Copper Corporation ("SPCC"), 15.5% in M.I.M. Holdings
Limited ("MIM"), and 23.6% in Grupo Mexico, S.A. de C.V. ("GMEXICO"). Such
companies are referred to herein as "associated companies".

Asarco's strategy since the mid-1980s has been to transform the Company
into an integrated producer of copper and lead. Once principally a custom
smelter and refiner of ores and concentrates produced by others, Asarco has
evolved during the last decade into one of the world's largest integrated
producers of nonferrous metals. In 1985, Asarco supplied less than 25% of its
copper concentrate requirements for its copper smelters and 5% of its lead
concentrate requirements for its Missouri lead smelter; in 1991, Asarco supplied
to these smelters approximately 76% of its copper concentrate and 80% of its
lead concentrate requirements. With the completion of Asarco's expansion
programs in 1993, the Company is now able to supply all of its copper
concentrate and 95% of its lead concentrate requirements. Since 1988, Asarco has
expanded its specialty chemicals business both by growth of its existing
operations and by acquisition, has expanded its minerals business by acquisition
and has entered the hazardous waste management and waste recycling business.

Asarco or its associated companies operate mines, smelters and refineries
in the United States, Australia, Mexico and Peru. Asarco and its associated
companies together in 1993 accounted for approximately 13% of the western world
mine production of copper, 22% of lead, 13% of zinc and 13% of silver.

THE OFFERING

<TABLE>
<S> <C>
Securities Offered.......................... Common Stock, no par value
Common Stock Outstanding as of
September 30, 1994........................ 42,038,891 Shares(1)
Common Stock Offered by the Selling
Stockholder(2):
U.S. Offering............................. 6,650,000 Shares
International Offering.................... 2,850,000 Shares
-----------------
Total..................................... 9,500,000 Shares
New York Stock Exchange symbol.............. AR
</TABLE>

- ---------------

(1) Does not include an aggregate of 2,520,000 shares reserved for issuance
under employee compensation or benefit plans.
(2) Assumes the Underwriters' over-allotment option is not exercised.

USE OF PROCEEDS

The Company will not receive any of the proceeds from the shares of Common
Stock sold by the Selling Stockholder. See "Use of Proceeds".

S-3
<PAGE> 4

SUMMARY FINANCIAL INFORMATION

The following summary financial information for each year in the five years
ended December 31, 1993 has been derived from financial statements audited by
Coopers & Lybrand, independent accountants. The summary financial information
for the nine months ended September 30, 1994 and September 30, 1993 is
unaudited; Coopers & Lybrand, however, has applied limited procedures in
accordance with professional standards for a review of such information as
described in "Experts" herein. In the opinion of management, all adjustments
(consisting only of normal recurring accruals) have been made to present fairly
on a basis consistent with generally accepted accounting principles the
consolidated results of operations for such periods. The results of operations
for the nine months ended September 30, 1994 are not necessarily indicative of
results for the year ending December 31, 1994. This information should be read
in conjunction with the related financial statements and notes incorporated in
this Prospectus Supplement by reference.

<TABLE>
<CAPTION>
NINE MONTHS ENDED
SEPTEMBER 30, YEARS ENDED DECEMBER 31,
(DOLLARS IN THOUSANDS, ----------------------- -------------------------------------------------------------
EXCEPT PER SHARE AMOUNTS) 1994 1993 1993 1992 1991 1990 1989
--------- ---------- --------- --------- --------- --------- ---------
(UNAUDITED)

<S> <C> <C> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA:
Sales of products and
services.................... $1,443,705 $1,300,823 $1,736,358 $1,908,492 $1,911,806 $2,210,280 $2,213,271
Operating costs and
expenses.................... 1,479,832 1,363,002 1,847,117 1,950,246 1,850,686 2,083,500 1,975,145
--------- ---------- --------- --------- --------- --------- ---------
Operating income (loss)....... (36,127) (62,179) (110,759) (41,754) 61,120 126,780 238,126
Interest expense.............. (45,104) (42,250) (57,321) (51,230) (46,227) (38,038) (28,942)
Other income.................. 7,429 15,612 19,961 23,911 22,870 26,561 31,544
Gain on sale of Asarco
Australia Limited........... 58,512 10,286 10,286 -- -- -- --
Gain on issuance of capital
stock by Asarco Australia
Limited..................... -- 3,270 3,270 -- -- -- --
--------- ---------- --------- --------- --------- --------- ---------
Earnings (loss) before taxes
and equity earnings and
cumulative effect of changes
in accounting principles.... (15,290) (75,261) (134,563) (69,073) 37,763 115,303 240,728
Taxes on income (benefit)..... (297) (16,737) (36,503) (37,371) 2,199 15,910 56,936
--------- ---------- --------- --------- --------- --------- ---------
Earnings (loss) before equity
earnings and cumulative
effect of changes in
accounting principles....... (14,993) (58,524) (98,060) (31,702) 35,564 99,393 183,792
Equity in earnings (loss) of
nonconsolidated associated
companies, net of taxes..... 30,812 484 27,384 2,575 10,393 36,451 40,549
--------- ---------- --------- --------- --------- --------- ---------
Earnings (loss) before
cumulative effect of changes
in accounting principles.... 15,819 (58,040) (70,676) (29,127) 45,957 135,844 224,341
Cumulative effect of changes
in accounting principles,
net of taxes................ -- -- 86,295 (53,964) -- -- --
--------- ---------- --------- --------- --------- --------- ---------
Net earnings (loss)........... $ 15,819 $ (58,040) $ 15,619 $ (83,091) $ 45,957 $ 135,844 $ 224,341
========= ========= ========= ========= ========= ========= =========
PER COMMON SHARE AMOUNTS:
Earnings (loss) before
cumulative effect of changes
in accounting principles.... $ 0.38 $ (1.40) $ (1.70) $ (0.70) $ 1.12 $ 3.28 $ 5.34
Cumulative effect of changes
in accounting principles.... -- -- 2.08 (1.31) -- -- --
--------- ---------- --------- --------- --------- --------- ---------
Net earnings (loss)........... $ 0.38 (1.40) $ 0.38 $ (2.01) $ 1.12 $ 3.28 $ 5.34
========= ========= ========= ========= ========= ========= =========
Cash dividends................ $ 0.30 $ 0.40 $ 0.50 $ 0.80 $ 1.60 $ 1.60 $ 1.50
Weighted average number of
shares outstanding.......... 41,850 41,564 41,594 41,364 41,128 41,404 42,043
BALANCE SHEET DATA:
(end of period)
Cash and cash equivalents..... $ 19,881 $ 14,111 $ 12,500 $ 33,248 $ 35,210 $ 34,593 $ 23,464
Working capital............... 256,277 229,063 201,142 266,541 284,159 342,744 255,999
Total assets.................. 3,304,199 2,905,262 3,152,498 2,945,916 2,953,837 2,789,952 2,455,862
Total debt.................... 927,520 886,059 900,547 868,769 801,554 543,197 348,079
Stockholders' equity.......... 1,525,651 1,290,810 1,471,598 1,357,493 1,474,828 1,489,879 1,431,170
</TABLE>

See also "Selected Consolidated Financial Information" and accompanying
footnotes on page S-21.

S-4
<PAGE> 5

SUMMARY PRODUCTION AND RESERVE DATA

The following table presents summary production and reserve data for the
periods indicated.

<TABLE>
<CAPTION>
PRODUCTION(1)
(CONTAINED METAL IN THOUSANDS OF TONS)
------------------------------------------
1993 1992 1991
------ ------ ------
<S> <C> <C> <C>
COPPER
Mine......................................... 307.8 308.4 249.4
Smelter...................................... 286.1 316.3 290.6
Refinery..................................... 496.6 509.4 492.8
</TABLE>

<TABLE>
<CAPTION>
PRODUCTION(1)
(CONTAINED METAL IN THOUSANDS OF TONS)
------------------------------------------
1993 1992 1991
------ ------ ------
<S> <C> <C> <C>
LEAD
Mine......................................... 131.1 113.6 111.7
Smelter...................................... 193.8 201.7 202.2
Refinery..................................... 197.7 205.1 208.0
</TABLE>

<TABLE>
<CAPTION>
PRODUCTION(1)
(CONTAINED METAL IN THOUSANDS OF TONS)
------------------------------------------
1993 1992 1991
------ ------ ------
<S> <C> <C> <C>
ZINC
Mine......................................... 102.4 109.6 109.0
</TABLE>

<TABLE>
<CAPTION>
PRODUCTION(1)
(CONTAINED METAL IN THOUSANDS OF TROY
OUNCES)
------------------------------------------
1993 1992 1991
------ ------ ------
<S> <C> <C> <C>
SILVER
Mine......................................... 6,252 7,883 9,298
Refinery..................................... 35,666 39,805 32,107
</TABLE>

<TABLE>
<CAPTION>
MINERAL RESERVES
AT DECEMBER 31, 1993
(TONS IN MILLIONS)(2)
-----------------------
<S> <C>
RESERVES
Copper........................................ 2,288.5
Lead.......................................... 26.8
Zinc.......................................... 36.5
Silver........................................ 17.1(3)
</TABLE>

- ---------------

(1) Includes Asarco's share of the production of each mine.

(2) Includes 100% of the mineral reserves for each mine. For Asarco's interest
in such mines, see "The Company".

(3) Excludes reserves of mines where silver is produced as a co-product. See
"The Company".

See also more detailed data appearing in "The Company".

S-5
<PAGE> 6

THE COMPANY

BUSINESS

Asarco is one of the world's leading producers of nonferrous metals. The
principal metals Asarco produces are copper, lead, zinc, silver and gold. Asarco
also produces specialty chemicals and minerals and provides environmental
services. Asarco has substantial equity interests in three mining companies:
52.3% in Southern Peru Copper Corporation ("SPCC"), 15.5% in M.I.M. Holdings
Limited ("MIM") and 23.6% in Grupo Mexico, S.A. de C.V. ("GMEXICO"). Such
companies are referred to herein as "associated companies".

All tonnages set forth in this Prospectus Supplement are expressed in short
tons unless otherwise indicated. All ounces set forth herein are expressed in
terms of troy ounces.

METALS

Copper. Asarco produces copper from its Ray, Mission and Silver Bell mines
in Arizona and from the 49.9%-owned Montana Resources mine in Montana. Copper
concentrates from these mines are processed at Asarco's El Paso smelter in Texas
and Hayden smelter in Arizona. Anode copper from these smelters is refined at
Asarco's Amarillo refinery in Texas. Asarco also produces refined copper using a
solvent extraction/electrowinning ("SX-EW") process at its Ray mine. Asarco's
Silver Bell mine currently produces precipitate copper. The Company has recently
obtained permits to construct and operate an SX-EW operation at its Silver Bell
mine.

In 1993, Asarco completed a $437 million program, initiated in 1989, to
expand and modernize its Ray and Mission mines and its El Paso smelter. At Ray,
the mining rate was doubled and the mill capacity was increased from 30,000 tons
per day to 60,000 tons per day. As a result of this program, total mine
production capacity of copper at Ray increased from approximately 115,000 tons
annually to approximately 165,000 tons. Ray, Asarco's largest mine, had ore
reserves at year-end 1993 of 1.1 billion tons with an average grade of 0.63%
copper.

At Mission, the expansion program increased mill capacity from 40,000 tons
per day to 59,000 tons per day. Since 1985, Asarco has acquired the formerly
separate Pima and Eisenhower open pits, and integrated these operations with
Asarco's Mission and San Xavier South pits into a single open pit mine. Overall,
Mission's total mine production capacity has doubled since 1985 to approximately
120,000 tons of copper annually. Mission's ore reserves at year-end 1993 were
543 million tons with an average grade of 0.67% copper.

At El Paso, as part of the expansion program, Asarco installed new smelting
technology utilizing a continuous top-feed oxygen process ("CONTOP"), which
increased El Paso's capacity to smelt copper in concentrates from 80,000 tons of
copper per year to 110,000 tons per year and significantly reduced its emissions
of sulfur dioxide.

S-6
<PAGE> 7

Asarco's Hayden smelter uses oxygen flash furnace technology to process
copper concentrate produced at both the Ray and Mission mines. The Hayden
smelter's capacity to smelt copper in concentrates is 175,000 tons of contained
copper annually. A total of 194,000 tons of anode copper was produced in 1993.
Although Asarco is now self-sufficient in its supply of concentrates to its
copper smelters, the Company may from time to time buy and sell copper
concentrates in order to balance the metallurgical requirements of its smelters.

Anode copper from Asarco's El Paso and Hayden smelters and from third
parties is refined at Asarco's Amarillo copper refinery. Late in 1993, the
Amarillo copper refinery completed installation and startup of a new electrolyte
purification facility to improve copper quality and permit the refinery to
operate at a higher production rate.

With the expansion program completed in 1993 and previous acquisitions and
expansions of copper operations, the Company has increased its mine production
of copper from approximately 78,000 tons in 1985 to approximately 308,000 tons
in 1993. Total copper ore reserves increased from 278 million tons at the end of
1984 to 2.3 billion tons at the end of 1993. A summary of the Company's copper
production for each of 1991, 1992 and 1993 is presented in Table 1. The
Company's copper reserves as of December 31, 1993 are presented in Table 2.

The Company's refined copper sales in 1993 were $917 million.

COPPER OPERATIONS

(TABLE 1)

<TABLE>
<CAPTION>
PRODUCTION
(CONTAINED METAL IN THOUSANDS OF
ASARCO TONS)
INTEREST -----------------------------------
(%) 1993 1992 1991
-------- ----- ----- -----
<S> <C> <C> <C> <C>
MINE
Mission........................................ 100.0 117.9 103.2 88.5
Ray
Concentrates................................. 100.0 122.7 123.0 74.7
SX/EW........................................ 100.0 36.6 42.2 42.6
Montana Resources.............................. 49.9 47.2 52.4 50.4
Others......................................... 8.2 17.7 23.7
----- ----- -----
Total..................................... 332.6 338.5 279.9
===== ===== =====
Asarco Share.............................. 307.8 308.4 249.4
===== ===== =====
SMELTER
El Paso(1)..................................... 100.0 91.9 107.9 105.9
Hayden(1)...................................... 100.0 194.2 208.4 184.7
----- ----- -----
Total..................................... 286.1 316.3 290.6
===== ===== =====
REFINERY
Amarillo....................................... 100.0 460.0 467.2 450.2
Ray(2)......................................... 100.0 36.6 42.2 42.6
----- ----- -----
Total..................................... 496.6 509.4 492.8
===== ===== =====
</TABLE>

- ---------------

(1) Represents total production of copper contained in anodes produced from
concentrates, blister (an intermediate product containing approximately 98%
copper) and copper scrap.

(2) SX/EW production also included above under "Mine Production".

S-7
<PAGE> 8

COPPER RESERVES

(TABLE 2)

<TABLE>
<CAPTION>
MINERAL RESERVES
ASARCO AT DECEMBER 31, 1993
INTEREST (TONS IN GRADE
(%) MILLIONS)(1) (%)
-------- -------------------- -----
<S> <C> <C> <C>
MINE
Mission................................................ 100.0 542.9 0.67
Ray.................................................... 100.0 1,097.2 0.63
Montana Resources...................................... 49.9 547.1 0.35
Silver Bell............................................ 100.0 101.3 0.47
--------
Total 2,288.5
========
</TABLE>

- ---------------

(1) Includes 100% of the reserves at each mine.

Unusually heavy rainfall in 1991, 1992 and early 1993 caused an
accumulation of 2.3 billion gallons of water at the Ray mine by early 1993. In
early 1994, the Company encountered unexpectedly low grade, wet sticky ore and
unusual ore types in the active mining area at Ray. The accumulation of water
limited the availability of other mining areas as a source of ore to blend with
these difficult ores.

As a result of these conditions, in July 1994 the Company commenced a
fifteen month program to accelerate the development of additional mining areas
at the Ray mine to provide greater operating flexibility. During this period,
the operations in the older, higher cost sections of the Hayden mill, which
comprise approximately 43% of the design capacity, are being curtailed. The new
Ray mill, which was completed in 1992 as part of the expansion program,
continues to operate at full capacity. The accelerated development program is
expected to be completed by October 1995, at which time the Hayden mill will be
restored to full capacity. Through an increase in the capacity of evaporative
systems and use of the water treatment plant, the Company has reduced the amount
of water at Ray to 1.5 billion gallons as of mid-September 1994.

The Hayden smelter will continue to operate at full capacity by smelting
concentrates from Ray, Mission and Montana Resources as well as concentrates
purchased from third parties. During the accelerated development program at Ray,
it is estimated that Asarco's copper mine production will be approximately
290,000 tons annually. The Company expects its refined copper production to
remain unchanged at approximately 500,000 tons per year.

In late May and early June 1994, one of the sulfuric acid plants at the El
Paso smelter was substantially rebuilt, which caused a 12-day outage. In late
August and early September 1994, a preheater at one of its sulfuric acid plants
was replaced which caused a nine day outage. In both instances, smelter
production was limited to 40% of design capacity during the outage and
subsequently returned to design capacity.

The Company's cost of producing copper has been higher than expected due to
the problems at Ray and the startup of new smelting technology at El Paso. The
Company is committed to reducing its costs and has a number of programs in place
designed to increase production and lower costs at each operation. The Company
expects that completion of the accelerated development program at Ray will
enable it to increase mine production to design levels and lower costs. The
Company expects that the achievement of higher operating rates, higher acid
quality and improved dust handling at El Paso will also lower costs. The Company
also expects that the installation of the electrolyte purification system at the
Amarillo copper refinery will enable it to increase operating rates and lower
unit costs. In addition to these plans to enhance operating efficiencies, Asarco
established in mid-1993 a Company-wide management program designed to increase
productivity and lower spending. Production and cost targets have been developed
for each operation; each operating employee has job-specific operating goals.
Notwithstanding the Company's commitment to the programs described above, there
can be no assurance that such programs will increase production and lower costs.

S-8
<PAGE> 9

Lead. Asarco's lead business consists of two distinct operations. In
Missouri, the Company operates an integrated lead circuit consisting of the West
Fork and Sweetwater mines, which provide 95% of the feed for the nearby Glover,
Missouri smelter and refinery. The Company believes that its Missouri lead
operations are among the lowest cost producers of lead in the world. In the
western United States, the Company operates a custom lead business that
processes ores and concentrates purchased from third parties at its East Helena,
Montana smelter and its Omaha, Nebraska refinery. The custom lead business also
is supplied by concentrates from the multi-metal mine in Leadville, Colorado and
the Quiruvilca mine in Peru. The custom lead business processes principally lead
concentrates with high precious metals values. A summary of the Company's lead
production for each of 1991, 1992 and 1993 is presented in Table 3. The
Company's lead reserves as of December 31, 1993 are presented in Table 4.

The Company's refined lead sales in 1993 were $87 million.

LEAD OPERATIONS

(TABLE 3)

<TABLE>
<CAPTION>
PRODUCTION
(CONTAINED METAL IN THOUSANDS OF
ASARCO TONS)
INTEREST -----------------------------------
(%) 1993 1992 1991
-------- ----- ----- -----
<S> <C> <C> <C> <C>
MINE
Leadville...................................... 53.1 5.4 6.1 6.4
Sweetwater..................................... 100.0 69.9 50.9 49.9
West Fork...................................... 100.0 53.6 56.2 54.5
Others......................................... 6.1 4.1 5.6
----- ----- -----
Total..................................... 135.0 117.3 116.4
===== ===== =====
Asarco Share.............................. 131.1 113.6 111.7
===== ===== =====
SMELTER
East Helena.................................... 100.0 69.7 71.6 72.7
Glover......................................... 100.0 124.1 130.1 129.5
----- ----- -----
Total..................................... 193.8 201.7 202.2
===== ===== =====
REFINERY
Glover......................................... 100.0 124.2 130.1 129.5
Omaha.......................................... 100.0 73.5 75.0 78.5
----- ----- -----
Total..................................... 197.7 205.1 208.0
===== ===== =====
</TABLE>

LEAD RESERVES

(TABLE 4)

<TABLE>
<CAPTION>
MINERAL RESERVES
ASARCO AT DECEMBER 31, 1993
INTEREST (TONS IN GRADE
(%) MILLIONS)(1) (%)
-------- -------------------- -----
<S> <C> <C> <C>
MINE
Leadville................................................ 53.1 0.7 3.17
Sweetwater............................................... 100.0 19.7 4.83
West Fork................................................ 100.0 6.4 5.72
-----
Total............................................... 26.8
======
</TABLE>

- ---------------
(1) Includes 100% of the reserves at each mine.

S-9
<PAGE> 10

Zinc. Asarco is one of the nation's leading zinc miners, operating four
mines near Knoxville, Tennessee. Zinc is also produced as a co-product at the
Company's Sweetwater and West Fork lead mines, Leadville multi-metal mines and
the Quiruvilca mine in Peru. The Company sells all of its zinc in the form of
concentrates to smelters owned by others. A summary of the Company's zinc
production for each of 1991, 1992 and 1993 is presented in Table 5. The
Company's zinc reserves as of December 31, 1993 are presented in Table 6.

The Company's zinc concentrate sales are included in the Company's report
on Form 10-K for 1993 in "Other Metal Sales", which in 1993 were $131 million
and included sales of several other metals.

ZINC OPERATIONS

(TABLE 5)

ZINC RESERVES

(TABLE 6)

<TABLE>
<CAPTION>
MINERAL RESERVES
ASARCO AT DECEMBER 31, 1993
INTEREST (TONS IN GRADE
(%) MILLIONS)(1) (%)
-------- -------------------- -----
<S> <C> <C> <C>
MINE
Leadville.............................................. 53.1 0.7 8.10
Missouri mines......................................... 100.0 26.1 0.86
Tennessee.............................................. 100.0 5.3 3.28
Quiruvilca-Peru........................................ 80.0 4.4 4.27
-----
Total............................................. 36.5
=====
</TABLE>

- ---------------
(1) Includes 100% of the reserves at each mine.

S-10
<PAGE> 11

Silver. While silver is found as a co-product in the ores mined at various
Asarco properties, Asarco put its last major silver-producing mine, the Troy
mine in Montana, on standby (a non-producing maintenance status) in April 1993
due to low silver prices. The Coeur and Galena silver mines in Idaho are also on
standby. While the price of silver has risen in 1994, higher sustained silver
prices are required to justify the reopening of the Troy, Coeur and Galena
mines. Production at these three mines was approximately 9.0 million ounces in
1990, the most recent full year these mines were in operation. A summary of the
Company's silver production is presented in Table 7. The Company's silver
reserves as of December 31, 1993 are presented in Table 8.

The Company's refined silver sales in 1993 were $138 million.

SILVER OPERATIONS

(TABLE 7)

<TABLE>
<CAPTION>
PRODUCTION
(CONTAINED METAL IN THOUSANDS OF TROY
ASARCO OUNCES)
INTEREST -------------------------------------
(%) 1993 1992 1991
-------- ----- ------ ------
<S> <C> <C> <C> <C>
MINE
Coeur........................................ 50.0 -- -- 381
Galena....................................... 37.5 -- 1,573 3,279
Mission...................................... 100.0 1,869 1,661 1,366
Ray.......................................... 100.0 827 872 598
Troy......................................... 75.0 812 3,044 3,950
Quiruvilca-Peru.............................. 80.0 2,468 1,814 2,454
Others....................................... 1,516 1,636 1,558
----- ------ ------
Total................................... 7,492 10,600 13,586
===== ====== ======
Asarco Share............................ 6,252 7,883 9,298
===== ====== ======
REFINERY
Amarillo..................................... 100.0 35,666 39,805 32,107
</TABLE>

SILVER RESERVES

(TABLE 8)

<TABLE>
<CAPTION>
MINERAL RESERVES
ASARCO AT DECEMBER 31, 1993
INTEREST (TONS IN GRADE
(%) MILLIONS)(1) (OUNCES/TON)
-------- -------------------- ------------
<S> <C> <C> <C>
MINE
Coeur............................................. 50.0 0.4 17.32
Galena............................................ 37.5 1.0 15.07
Mission........................................... 100.0 542.9 0.16
Ray............................................... 100.0 1,097.2 .05
Troy.............................................. 75.0 11.3 1.42
Quiruvilca-Peru................................... 80.0 4.4 6.12
--------
Total........................................ 1,657.2(2)
========
</TABLE>

- ---------------
(1) Includes 100% of the reserves at each mine.
(2) Includes reserves of mines where silver is produced as a co-product.

S-11
<PAGE> 12

Gold. Asarco produces approximately 225,000 ounces of refined gold
annually from gold contained in high precious metal lead concentrates. Until
recently, the Company's principal gold mining activity had been conducted
through Asarco Australia Limited ("Asarco Australia"). In mid-1993, Asarco sold
a portion of its 60% interest in Asarco Australia. At such time it changed to
the equity method of accounting for this investment and ceased including the
production of Asarco Australia in its gold mine production. In early 1994,
Asarco sold its remaining interest in Asarco Australia. Over an eight-year
period, Asarco realized over $106 million in pretax cash from its original
investment in Asarco Australia of $4 million.

The Company's refined gold sales in 1993 were $58 million.

SALES OF METALS

Substantially all of the Company's copper and lead production is sold under
annual contracts. To the extent not sold under annual contracts, production can
be sold on commodities exchanges or to merchants and consumers on a spot sale
basis. Zinc is sold in the form of concentrates under contracts of one to three
years' duration. Silver and gold are sold under monthly contracts or in spot
sales. Sales prices are generally based on average or prevailing commodity
prices for the scheduled month of delivery or shipment according to the terms of
the contracts.

Depending on the market fundamentals of a metal and other conditions, the
Company may enter into forward sales or purchase put options or establish
synthetic put options to reduce or eliminate the risk of metal price declines on
its anticipated future production. Put options purchased by the Company
establish a minimum price for the production covered by such put options and
permit the Company to participate in price increases above the strike price of
such put options. As of September 30, 1994, the Company had copper put options
with an average strike price of 90.0 cents per pound, covering 6,900 tons of
1994 production representing approximately 10% of the Company's fourth quarter
1994 copper production, and copper put options with an average strike price of
91.9 cents per pound, covering 137,600 tons or approximately 48% of its 1995
copper production.

Forward sales establish a selling price for future production at the time
they are entered into, thereby eliminating the risk of declining prices but also
eliminating potential gains on price increases if not bought back. Synthetic put
options are established by entering into a forward sale and purchasing a call
option for the same quantity of the relevant metal and for the time period
relating to such forward sale. The forward sale price establishes a minimum
price that will be realized, while the call option permits the Company to
participate in price increases. As of September 30, 1994, the Company had
synthetic put options covering 22,700 tons of expected fourth quarter 1994 zinc
production at a price of 45.0 cents per pound. For a discussion of prices,
production, consumption and inventory levels of the Company's metals, see
"Summary of Metals Markets".

SPECIALTY CHEMICALS

Asarco's wholly-owned subsidiary Enthone-OMI, Inc. ("Enthone-OMI") produces
specialty chemicals used for surface treatment and plating of metals. This
subsidiary was formed through a consolidation of Enthone, Incorporated (based in
the United States), OMI International Corporation (acquired in 1988 with
operations in the United States, Europe and Asia) and the Imasa Group (acquired
in 1989 with operations in Europe). In the past five years, Enthone-OMI also
acquired, expanded or established manufacturing and laboratory facilities in
Singapore, Mexico and Australia.

Enthone-OMI supplies specialty chemicals to the aerospace, automotive,
electronics and jewelry industries. The majority of its sales are derived from
proprietary processes engineered to meet specific customer requirements for
plating or surface treatment of metals.

The Company's specialty chemical sales in 1993 were $251 million.

S-12
<PAGE> 13

MINERALS

American Limestone Company, Inc. ("American Limestone"), a wholly-owned
subsidiary of Asarco, produces construction aggregates, concrete and
agricultural limestone. American Limestone serves a broad range of customers in
the southeastern United States and operates six concrete plants and eight
quarries in Tennessee and western Virginia. The majority of its business is in
public infrastructure development and commercial and residential construction.

The Company's minerals sales in 1993 were $37 million.

ENVIRONMENTAL SERVICES

Asarco also conducts an environmental services business through its
wholly-owned subsidiaries, Encycle/ Texas Inc. of Corpus Christi, Texas
("Encycle") and Hydrometrics, Inc. of Helena, Montana ("Hydrometrics"). Encycle
operates a waste recycling facility in Corpus Christi which recovers and
recycles nonferrous metals from hazardous and nonhazardous inorganic solids and
solutions. The recovered metals are returned to commerce. Hydrometrics, with
several offices in the western United States, provides a wide range of
professional consulting services for industrial clients, private firms,
municipalities and public agencies. The construction division of Hydrometrics
provides complete remediation and cleanup services for contaminated industrial
sites as well as Superfund sites.

The Company's sales of environmental services in 1993 were $14 million.

ASSOCIATED COMPANIES

Asarco has long held investments in three of the world's major mining
companies. These investments include a 52.3% interest in Southern Peru Copper
Corporation ("SPCC") in Peru, a 15.5% interest in M.I.M. Holdings Limited
("MIM") in Australia, and a 23.6% interest in Grupo Mexico, S.A. de C.V.
("GMEXICO") in Mexico. These equity investments allow the Company to participate
in other major nonferrous metals companies, which Asarco believes have
competitive positions, attractive ore reserves, and operate in strategic
geographic areas.

Southern Peru Copper Corporation. Asarco has owned over 50% of SPCC since
1954. Recent favorable political and economic developments in Peru and higher
copper prices have enabled SPCC to return to profitability. SPCC repurchased
shares pro rata from its shareholders for $60 million in the fourth quarter of
1991 and thereafter has paid quarterly cash dividends. SPCC paid dividends to
Asarco of $9.4 million in 1993, and $7.3 million to date in 1994.

SPCC operates two open pit copper mines, the Toquepala and Cuajone mines,
and the Ilo smelter and refinery in Peru. In 1993, SPCC produced from its mines
265,500 tons of copper, 2.8 million ounces of silver and 10.5 million pounds of
molybdenum. SPCC had earnings in 1993 of $29.1 million before the cumulative
effect of adopting Statement of Financial Accounting Standards 109 "Accounting
for Income Taxes" ("SFAS 109"), which added $165.1 million to earnings. Earnings
in 1992 were $45.6 million. The decrease in earnings before the cumulative
effect of adopting SFAS 109 in 1993 was due to lower copper prices. Net sales
for 1993 were $474.0 million, compared with $550.5 million for 1992.

SPCC has undertaken a five-year, $300 million capital program to expand
production and improve environmental operations at its facilities. This program
includes a $102 million SX-EW plant at the Toquepala mine and leaching pads at
both the Cuajone and Toquepala mines. This new facility is expected to increase
annual copper production by approximately 40,000 tons at a cash cost
significantly lower than SPCC's current cost of producing copper. Completion is
scheduled for the end of the third quarter of 1995. The capital program also
includes the construction of an acid plant at SPCC's Ilo smelter and $100
million to be spent through 1996 on equipment modernization and technological
improvements. In May 1994, SPCC completed the purchase of the state-owned Ilo
copper refinery for $65 million and a commitment to spend $20 million over the
following three years to increase capacity and improve efficiency. The refinery
is now integrated with SPCC's existing operations.

S-13
<PAGE> 14

During 1993, Peru reached agreement on the restructuring of its foreign
debt with a number of major international financial organizations, including the
World Bank and the International Monetary Fund. In October 1993, following a
national referendum, a constitutional government was restored. The referendum
ratified a new constitution for Peru and represented an endorsement of President
Fujimori's reform policies enabling the continuation of fundamental change in
the country. In the fourth quarter of 1993, several additional events occurred
which provided sufficient confidence that Asarco again had significant influence
over its investment in SPCC. These included the successful completion in the
fourth quarter of SPCC's $250 million financing program which will provide
funding for the capital projects which it had committed to in a 1991 agreement
with the Peruvian Government. SPCC also entered into an unprecedented three-year
labor contract with its seven unions assuring continuity of operations without
excessive labor disruptions. As a consequence of these and other favorable
developments, Asarco resumed equity accounting for its investment in SPCC in the
fourth quarter of 1993.

M.I.M. Holdings Limited. Asarco's interest in MIM dates back to 1930, when
the Company acquired an equity interest. In 1987, Asarco reduced its holding
from 34.9% to 19%, generating net proceeds of $381.1 million, which were used,
in part, to finance the Company's copper integration program. Asarco has the
right to nominate two persons for election to MIM's Board of Directors so long
as Asarco's ownership exceeds 241,718,641 shares of MIM common stock, which
shall be adjusted for stock dividends, stock splits and rights offers and so
long as such ownership constitutes more than 10% of MIM's outstanding common
shares. Asarco currently owns sufficient MIM shares to have the right to
nominate two directors of MIM but does not currently intend to exercise this
right. See "Selling Stockholder".

MIM is a publicly traded Australian mining company that produces copper,
lead, zinc, silver, gold and coal and has interests in metal companies in Europe
and North America, including a 24.6% interest in Asarco prior to the sale of the
shares offered hereby. MIM owns and operates several mines and a copper refinery
in Australia, nonferrous metals operations in England, a refinery in each of
Germany and Austria and an interest in the Porgera gold mine in Papua New
Guinea. MIM has been pursuing cost-reduction measures throughout its copper,
lead, zinc, silver, gold and coal operations. MIM completed a five-year program
of capital expenditures at Mount Isa in 1993 that increased mining and
processing capacity and enhanced processing technology and environmental
performance. Asarco accounts for its investment in MIM on a cost basis.

MIM had a net loss in its latest fiscal year ended June 30, 1994 of A$195.1
million, compared with the prior year's net earnings of A$74.0 million. The loss
for the fiscal year ended June 30, 1994 mainly reflected write-downs and loss
provisions with respect to assets in Germany where MIM's interests have
undergone restructuring. Sales for the most recent fiscal year were A$2.19
billion, compared with A$1.93 billion the year earlier. In the fiscal year 1994,
MIM produced from its own mines 183,625 metric tons of copper, 191,800 metric
tons of lead, 255,595 metric tons of zinc and 15.6 million ounces of silver. (A
metric ton is equivalent to approximately 2,204.6 pounds.) Asarco received $8.3
million in dividends from MIM in 1993 and has received $4.8 million to date in
1994. MIM has paid dividends every year since 1948.

Grupo Mexico, S.A de C.V. Asarco's investments in Mexico date back to
1901, when Asarco owned 100% of the assets of GMEXICO's predecessor. By 1974,
the Company had reduced its interest to 34% as required by Mexican government
rules. Most recently, Asarco held 28.3% in Mexico Desarrollo Minero, S.A. de
C.V. ("MEDIMSA"). In August 1994, Asarco combined its 28.3% interest in MEDIMSA
with the interest of MEDIMSA's 68.8% owner to form GMEXICO, a new company
publicly traded in Mexico. Asarco now owns shares of this public company, which
increases the liquidity of its investment. See "Recent Developments". Mr.
Richard de J. Osborne, Chairman, President and Chief Executive Officer of Asarco
and Mr. Francis R. McAllister, Executive Vice President - Copper Operations of
Asarco currently serve as directors on the Board of GMEXICO. Asarco has not
received dividends from this investment since 1988 and accounts for its
investment on the cost basis.

GMEXICO's operating subsidiaries include Mexicana de Cobre, S.A. de C.V.,
which owns and operates the La Caridad mine and the Nacozari smelter; Mexicana
de Cananea, S.A. de C.V., which owns and operates the Cananea mine and smelter;
and Industrial Minera Mexico, S.A. de C.V., which operates seven zinc, silver
and lead mines and three metallurgical plants. In 1993, GMEXICO's predecessor,
MEDIMSA,

S-14
<PAGE> 15

had revenues of $885 million and net earnings of $51.6 million. In 1993,
GMEXICO's operating subsidiaries produced from their own mines 280,700 tons of
copper, 45,200 tons of lead, 189,800 tons of zinc and 14.3 million ounces of
silver.

ENVIRONMENTAL, SAFETY AND HEALTH MATTERS

Asarco's existing and former operations are subject to extensive
environmental regulation by various federal, state, local, and foreign
governments, and must comply with federal and state air and water quality and
solid and hazardous waste regulations. Emissions from Asarco's operations are
subject to permitting and control under the Clean Air Act and Clean Water Act.
Wastes generated by Asarco's operations are subject to regulation under the
Resource Conservation and Recovery Act and comparable state legislation. Asarco
is also subject to federal and state legislation and regulations pertaining to
plant and mine safety and health conditions, including the Occupational Safety
and Health Act of 1970 and the Federal Mine Safety and Health Act of 1977.
Asarco has made, and is likely to continue to make, substantial expenditures to
comply with such environmental laws and regulations. The Company believes that
its operations are currently in substantial compliance with applicable
environmental laws and regulations.

In 1993, a senior executive was named to oversee all of Asarco's
environmental efforts. The Company has established internal compliance review
programs and all of its United States units have been inspected by Company
compliance review teams. The Environmental, Safety and Health Policy Review
Committee, a sub-committee of the Management Committee, is headed by the Vice
President in charge of environmental operations. The responsibilities of this
committee include overseeing the environmental safety and health management
systems and compliance review programs of active operations, remediation
activities at Superfund sites, and voluntary remediation programs at closed and
former operations of the Company. In addition, the committee is supervising a
program to communicate product information relating to environmental and safety
issues to customers.

Asarco has received notices from the United States Environmental Protection
Agency ("EPA") that it is potentially responsible to correct alleged hazardous
substance releases under the Comprehensive Environmental Response, Compensation
and Liability Act of 1980 and from state agencies under comparable state laws.
The Company has entered into Consent Decrees with the EPA and state agencies
with respect to certain such sites, is undertaking remediation at several such
sites and is a party to litigation with respect to other such sites.

The Company has established reserves for environmental and closed plant
contingencies that it believes are probable and reasonably estimable. At
December 31, 1993, the Company's reserves totaled $116.1 million and at
September 30, 1994 totaled $130.3 million. On September 30, 1994 the Company
announced that it increased its reserves by $45.5 million. The financial
viability of other potentially responsible parties has been considered when
relevant and no credit has been assumed for any potential insurance recoveries
when the availability of insurance has not been determined.

Certain events and circumstances arising in 1990, 1992 and 1994 including
experience related to previous court judgments and settlements and remediation
costs and terms allowed Asarco to make reasonable estimates of the extent and
costs of environmental contingencies at certain sites and thus record additional
reserves. Developments also included draft feasibility studies, work plans and
negotiations or agreements with the EPA. Based on these and other developments,
the reserves for certain sites were increased. In total, the Company's
environmental and closed plant reserves were increased by $75.5 million in 1990,
$7.3 million in 1991, $72.4 million in 1992, $6.2 million in 1993 and $51.2
million in 1994 to date.

Potential exposure beyond Asarco's reserves for environmental contingencies
cannot be reliably determined in many circumstances due to the early stages of
investigation, the uncertainties relating to specific remediation and clean-up
and therefore the related costs, the possible participation of other potentially
responsible parties, insurance coverage issues and changing environmental laws
and interpretations. It is the opinion of management that the outcome of the
legal proceedings and environmental contingencies now pending will not
materially adversely affect the financial position of Asarco and its
consolidated subsidiaries. However, it is possible that future environmental
contingencies could have a material effect on quarterly or

S-15
<PAGE> 16

annual operating results, when they are resolved in future periods. For a more
detailed discussion of environmental matters involving Asarco, reference is made
to the Company's annual, quarterly and current reports including the Company's
Reports on Forms 10-K, 10-Q and 8-K, incorporated by reference herein and
available from the Company, as described in "Available Information".

SUMMARY OF METALS MARKETS

Copper, silver, lead and zinc are internationally-traded commodities whose
prices are effectively established on terminal markets including the London
Metal Exchange and, for copper and silver, the New York Commodity Exchange. The
following table sets forth quarterly average prices for copper, silver, lead and
zinc since 1992 and a recent price for each such metal.

<TABLE>
<CAPTION>
AVERAGE METALS PRICES
---------------------------------------------------
COPPER(1) LEAD(2) ZINC(2) SILVER(1)
--------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
($/POUND) ($/POUND) ($/POUND) ($/OUNCE)
1st Qtr. 1992.................................. 0.994 0.233 0.529 4.122
2nd Qtr. 1992.................................. 1.019 0.242 0.614 4.049
3rd Qtr. 1992.................................. 1.111 0.287 0.612 3.831
4th Qtr. 1992.................................. 0.985 0.219 0.494 3.736
1st Qtr. 1993.................................. 0.982 0.190 0.473 3.662
2nd Qtr. 1993.................................. 0.835 0.185 0.440 4.263
3rd Qtr. 1993.................................. 0.838 0.174 0.406 4.668
4th Qtr. 1993.................................. 0.757 0.188 0.426 4.612
1st Qtr. 1994.................................. 0.868 0.216 0.439 5.291
2nd Qtr. 1994.................................. 0.989 0.217 0.430 5.375
3rd Qtr. 1994.................................. 1.139 0.267 0.439 5.333
</TABLE>

- ---------------

(1) Source: COMEX First Position, Monthly Average Settlement

(2) Source: London Metal Exchange, Monthly Average Settlement

COPPER

Historically, the price of copper has been affected primarily by levels of
production and consumption, prevailing trends of inventory levels and, to a
lesser degree, inventory carrying costs (primarily interest rates) and
international exchange rates. These factors have been of varying importance in
influencing the prevailing price of copper, and often have had divergent impacts
on such price.

The primary domestic uses of copper are in the building and construction
industry, electrical and electronic products and, to a lesser extent, industrial
machinery and equipment, consumer and general products and transportation. The
consumption of copper for these purposes is affected by various factors,
including trends in the world economy and market competition with other metals
and materials.

S-16
<PAGE> 17

The following data show western world refined copper production (net of
imports to the western world), consumption, inventories and average annual
prices for the past five years and the average price for the six month period
ending June 30, 1994. Inventories shown are stocks of refined copper held by
western world refiners and those carried on the New York Commodity Exchange and
London Metal Exchange.

<TABLE>
<CAPTION>
COPPER
(THOUSANDS OF SHORT TONS)
--------------------------------------------------------------------
SIX MONTHS TO
JUNE 30,
1994 1993 1992 1991 1990 1989
------------- ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C>
Production(1)................. 4,847 10,033 9,817 9,396 9,336 9,167
Consumption(1)................ 5,465 10,200 10,004 9,893 9,655 9,500
Inventories (at end of
period)(2).................. 1,009 1,178 893 716 512 435
Average Price(3).............. $ 0.929 $0.853 $1.027 $1.049 $1.191 $1.249
</TABLE>

- ---------------
(1) Source: World Bureau of Metal Statistics

(2) Source: American Bureau of Metal Statistics, Inc.

(3) Source: COMEX First Position, Monthly Average Settlement

Refined copper inventories held by refiners and commodity exchanges at
December 31, 1993, as reported by the American Bureau of Metal Statistics, Inc.,
were 1,178,000 tons, consisting of 443,200 tons at western world refiners and
734,800 tons carried on commodity exchanges in New York and London. From January
1 to September 30, 1994, increasing western world demand along with flat
production resulted in a draw down of 318,500 tons of commodity exchange stocks.
At September 30, 1994, refined copper commodity exchange inventories had
declined to 416,300 tons, representing approximately two weeks of supply at
current consumption rates.

Western world refined copper consumption rose about 4.4% in the first half
of 1994 due mainly to an increase of almost 11.5% in U.S. consumption, a result
of strong demand from the automotive and construction sectors. While the Company
expects the growth rate in the United States to slow, European demand is on the
rise as the economic recovery in Europe continues. The Japanese economy is
showing signs of recovery while in the rest of Asia, refined copper demand
remains strong. The Company estimates that refined copper production was flat in
the first six months of 1994.

LEAD

Lead demand is affected primarily by the storage battery industry, which in
the U.S. accounts for approximately 81% of lead consumption. Demand for
batteries is affected by the failure rate of automobile batteries, principally
due to age and extreme weather conditions, and by demand for motor vehicles. In
general, the supply of lead from primary producers is partially dependent on the
prices of metals found in conjunction with lead. The following data show western
world refined lead production, consumption, London Metal Exchange inventory, and
average annual prices for the past five years and the average price for the six
month period ending June 30, 1994 but do not include inventory held by producers
or others. Changes in these holdings and the effect of imports account for the
unreconciled differences between production, consumption and inventory levels
shown below.

<TABLE>
<CAPTION>
LEAD
(THOUSANDS OF SHORT TONS)
--------------------------------------------------------------------
SIX MONTHS TO
JUNE 30,
1994 1993 1992 1991 1990 1989
------------- ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C>
Production(1)................. 2,514 4,806 4,482 4,862 4,865 5,039
Consumption(1)................ 2,551 4,916 4,903 4,920 4,930 5,037
London Metal Exchange
inventory
(at end of period).......... 391 335 234 139 62 25
Average Price(2).............. $ 0.217 $0.184 $0.245 $0.253 $0.367 $0.305
</TABLE>

- ---------------

(1) Source: International Lead and Zinc Study Group
(2) Source: London Metal Exchange, Monthly Average Settlement

S-17
<PAGE> 18

London Metal Exchange inventory levels at September 30, 1994 totaled
409,800 short tons representing approximately four weeks of supply at current
levels of production.

ZINC

Zinc is used primarily to make galvanized metal products, zinc-based
alloys, brass products, zinc oxide, rolled zinc, die cast and for other
industrial purposes. The following data show western world slab zinc production,
consumption, London Metal Exchange inventory and average annual prices for the
past five years and the average price for the six month period ending June 30,
1994, but do not include inventory held by producers or others.

<TABLE>
<CAPTION>
ZINC
(THOUSANDS OF SHORT TONS)
--------------------------------------------------------------------
SIX MONTHS TO
JUNE 30,
1994 1993 1992 1991 1990 1989
------------- ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C>
Production(1)................. 3,025 6,014 5,994 5,946 5,727 5,741
Consumption(1)................ 3,086 6,007 5,919 5,926 5,720 5,709
London Metal Exchange
inventory (at end of
period)..................... 1,320 999 504 168 60 89
Average Price(2).............. $ 0.435 $0.436 $0.562 $0.507 $0.689 $0.776
</TABLE>

- ---------------

(1) Source: International Lead and Zinc Study Group
(2) Source: London Metal Exchange, Monthly Average Settlement

London Metal Exchange inventory levels at September 30, 1994 totaled
1,359,800 short tons, representing approximately eleven weeks of supply at
current consumption levels.

SILVER

The price of silver is influenced primarily by levels of production and
consumption, inventory trends, inventory carrying costs (primarily interest
rates) and foreign exchange rates. In addition, investor interest based upon
speculative expectation of future price movement also causes volatility in the
price of silver. The principal uses for silver are for photographic film,
electrical and electronic products and, to a lesser extent, silverware, brazing
alloys and solder and jewelry. The following data show western world mine supply
and consumption of silver inventories carried on the commodity exchanges in New
York, Chicago and London and annual average prices for the past five years. The
inventory levels shown below do not include substantial stocks in the hands of
governments or other holders that from time to time might have a material effect
on the price of silver. Changes in these holdings account for the unreconciled
difference between production, consumption and inventory levels shown below.

<TABLE>
<CAPTION>
SILVER
(MILLIONS OF TROY OUNCES)
--------------------------------------------------
1993 1992 1991 1990 1989
------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C>
Refined Production(1)....................... 494.4 521.5 515.4 521.6 511.6
Refined Consumption(1) (industrial and coinage) 678.7 593.4 576.2 544.1 508.4
Reported inventory levels (at end of
period)................................... 481.1 508.9 511.7 518.6 496.3
Average Price(2)............................ $4.301 $3.935 $4.034 $4.815 $5.498
</TABLE>

- ---------------

(1) Source: The Silver Institute and Asarco estimates
(2) Source: COMEX, First Position Monthly Average

Inventories carried on commodity exchanges at September 30, 1994 were 255.2
million troy ounces, representing approximately 20 weeks of supply at current
consumption levels. The average price for silver over the nine months to
September 30, 1994 was $5.333.

S-18
<PAGE> 19

RECENT DEVELOPMENTS

ENVIRONMENTAL RESERVES

On September 30, 1994, Asarco announced that it had taken a $30.7 million
after-tax expense provision, $45.5 million on a pre-tax basis, in its third
quarter 1994 results to add to its prior accruals for environmental costs
associated with the Company's previously closed facilities and current
operations. Asarco had a reserve for future environmental matters at September
30, 1994 of $130.3 million. The additional third quarter 1994 charge, together
with prior accruals, will accommodate resolutions reached in the third quarter
of 1994 at a number of sites, particularly at Asarco's former smelter in Tacoma,
Washington. The Company has reached an agreement in principle with the City of
Tacoma, Town of Ruston and Metropolitan Park District of Tacoma over a plan for
the final remediation of the smelter site. The agreement remains subject to
final acceptance by the EPA of the remediation plan, but the Company believes it
can now reasonably estimate the cost of remediation.

RUSSIAN JOINT VENTURE

On August 16, 1994, Asarco announced that the Company and its joint venture
partners, through Kamgold, won a bid to develop the Aginskoe gold deposit on the
Kamchatka Peninsula in the Russian Far East. Kamgold is a corporation in which
Asarco and Grynberg Resources of Denver each hold a 25% interest with the
remaining 50% held by Kamchatgeologia, a local Russian group. The Company
expects that a license from the Russian government will be obtained in the
fourth quarter of 1994 and, subject to completion of financing, to begin
development of the Aginskoe deposit by mid-1995. Asarco expects that it will
take approximately 18 months to complete underground development and the
construction of surface facilities. Asarco will manage Kamgold and develop the
Aginskoe deposit. Kamgold will seek multilateral agency financing for the
project which is expected to cost approximately $30 million.

MEXICAN RESTRUCTURING

In August 1994, Asarco combined its 28.3% interest in MEDIMSA with the
interest of MEDIMSA's 68.8% owner to form a new company publicly traded in
Mexico, named Grupo Mexico, S.A. de C.V. Asarco owns 23.6% of GMEXICO's
approximately 690 million outstanding shares. Asarco accounts for its investment
on the cost basis. As part of the MEDIMSA transaction, Asarco granted the
majority owners of GMEXICO a 7-year option to purchase shares aggregating 9% of
GMEXICO at a purchase price of $1.40 per share. Asarco agreed that it will not
sell any of its remaining shares for up to two years or until an international
offering of additional shares is made by GMEXICO.

S-19
<PAGE> 20

CAPITALIZATION

<TABLE>
<CAPTION>
AS OF
SEPTEMBER 30, 1994
------------------
($ IN MILLIONS)
<S> <C>
Short-term Debt
Bank Loans.............................................................. $ 7.2
Current Portion of Long-term Debt....................................... 14.3
--------
Total Short-term Debt..................................................... $ 21.5
========
Long-term Debt
Revolving Credits, with interest rates averaging 3.8% at December 31,
1993 and 5.4% at September 30, 1994.................................. $ 400.0
Pollution Control Bonds, with interest rates from 6.75% to 8.9% due in
varying amounts annually from 1994 to 2006........................... 170.5
Capital Lease Obligations, with interest rates from 7.3% to 12.0% due
from
1994 to 2006......................................................... 85.9
7% Debentures Due 2001.................................................. 50.0
7 3/8% Debentures Due 2003.............................................. 99.4
7 7/8% Debentures Due 2013.............................................. 99.7
Foreign and Other Debt, with interest rates from 5.0% to 10.35% due in
varying amounts annually through 2000................................ 0.5
--------
Total Long-term Debt, less Current Portion.............................. 906.0
--------
Deferred Income Taxes..................................................... 166.3
--------
Stockholders' Equity
Common Stock............................................................ 680.0
Retained Earnings....................................................... 956.6
Treasury Stock, at Cost................................................. (110.9)
--------
Total Stockholders' Equity.............................................. 1,525.7
--------
Total Capitalization(1).............................................. $2,598.0
========
</TABLE>

- ---------------

(1) Total capitalization is the sum of total long-term debt (less current
portion), deferred income taxes and total stockholders' equity.

S-20
<PAGE> 21

SELECTED CONSOLIDATED FINANCIAL INFORMATION

The following selected consolidated financial information for each year in
the five years ended December 31, 1993 has been derived from financial
statements audited by Coopers & Lybrand, independent accountants. The selected
consolidated financial information for the nine months ended September 30, 1994
and September 30, 1993 is unaudited; Coopers & Lybrand, however, has applied
limited procedures in accordance with professional standards for a review of
such information as described in "Experts" herein. In the opinion of management,
all adjustments (consisting only of normal recurring accruals) have been made to
present fairly on a basis consistent with generally accepted accounting
principles the consolidated results of operations for such periods. The results
of operations for the nine months ended September 30, 1994 are not necessarily
indicative of results for the year ending December 31, 1994. This information
should be read in conjunction with the related financial statements and notes
incorporated in this Prospectus Supplement by reference.

<TABLE>
<CAPTION>
NINE MONTHS ENDED
SEPTEMBER 30, YEARS ENDED DECEMBER 31,
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE --------------------- ---------------------------------------------------------
AMOUNTS) 1994 1993 1993 1992 1991 1990 1989
--------- --------- --------- --------- --------- --------- ---------
(UNAUDITED)

<S> <C> <C> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA:
Sales of products and services................ $1,443,705 $1,300,823 $1,736,358 $1,908,492 $1,911,806 $2,210,280 $2,213,271
Operating costs and expenses:
Costs of products and services.............. 1,294,809 1,217,636 1,637,959 1,647,263 1,634,198 1,810,705 1,767,418
Selling, administrative and other........... 59,348 61,823 85,347 87,195 94,258 93,546 79,377
Provision (recovery) for doubtful
accounts.................................. (2,086) 2,088 2,902 3,436 13,625 1,985 854
Depreciation and depletion.................. 62,727 62,677 80,641 86,642 74,869 75,093 64,414
Research and exploration.................... 13,875 15,959 20,871 21,410 26,431 26,644 23,817
Loss on sale of business.................... -- -- -- -- -- -- 34,265
Provision for plant closures and
disposals................................. -- -- 13,156 31,900 -- -- --
Provision for environmental matters......... 51,159 2,819 6,241 72,400 7,305 75,527 5,000
--------- --------- --------- --------- --------- --------- ---------
Total operating costs and expenses........ 1,479,832 1,363,002 1,847,117 1,950,246 1,850,686 2,083,500 1,975,145
--------- --------- --------- --------- --------- --------- ---------
Operating income (loss)....................... (36,127) (62,179) (110,759) (41,754) 61,120 126,780 238,126
Interest expense.............................. (45,104) (42,250) (57,321) (51,230) (46,227) (38,038) (28,942)
Other income.................................. 7,429 15,612 19,961 23,911 22,870 26,561 31,544
Gain on sale of Asarco Australia Limited(1)... 58,512 10,286 10,286 -- -- -- --
Gain on issuance of capital stock by Asarco
Australia Limited........................... -- 3,270 3,270 -- -- -- --
--------- --------- --------- --------- --------- --------- ---------
Earnings (loss) before taxes and equity
earnings and cumulative effect of changes in
accounting principles....................... (15,290) (75,261) (134,563) (69,073) 37,763 115,303 240,728
Taxes on income (benefit)..................... (297) (16,737) (36,503) (37,371) 2,199 15,910 56,936
--------- --------- --------- --------- --------- --------- ---------
Earnings (loss) before equity earnings and
cumulative effect of changes in accounting
principles.................................. (14,993) (58,524) (98,060) (31,702) 35,564 99,393 183,792
Equity in earnings (loss) of nonconsolidated
associated companies, net of taxes(2)....... 30,812 484 27,384 2,575 10,393 36,451 40,549
--------- --------- --------- --------- --------- --------- ---------
Earnings (loss) before cumulative effect of
changes in accounting principles............ 15,819 (58,040) (70,676) (29,127) 45,957 135,844 224,341
Cumulative effect of changes in accounting
principles, net of taxes(3)(4).............. -- -- 86,295 (53,964) -- -- --
--------- --------- --------- --------- --------- --------- ---------
Net earnings (loss)........................... $ 15,819 $ (58,040) $ 15,619 $ (83,091) $ 45,957 $ 135,844 $ 224,341
========= ========= ========= ========= ========= ========= =========
PER COMMON SHARE AMOUNTS:
Earnings (loss) before cumulative effect of
changes in accounting principles............ $ 0.38 $ (1.40) $ (1.70) $ (0.70) $ 1.12 $ 3.28 $ 5.34
Cumulative effect of changes in accounting
principles.................................. -- -- 2.08 (1.31) -- -- --
--------- --------- --------- --------- --------- --------- ---------
Net earnings (loss)........................... $ 0.38 $ (1.40) $ 0.38 $ (2.01) $ 1.12 $ 3.28 $ 5.34
========= ========= ========= ========= ========= ========= =========
Cash dividends................................ $ 0.30 $ 0.40 $ 0.50 $ 0.80 $ 1.60 $ 1.60 $ 1.50
Weighted average number of shares
outstanding................................. 41,850 41,564 41,594 41,364 41,128 41,404 42,043

BALANCE SHEET DATA:
(end of period)
Cash and cash equivalents..................... $ 19,881 $ 14,111 $ 12,500 $ 33,248 $ 35,210 $ 34,593 $ 23,464
Working capital............................... 256,277 229,063 201,142 266,541 284,159 342,744 255,999
Total assets.................................. 3,304,199 2,905,262 3,152,498 2,945,916 2,953,837 2,789,952 2,455,862
Total debt.................................... 927,520 886,059 900,547 868,769 801,554 543,197 348,079
Stockholders' equity.......................... 1,525,651 1,290,810 1,471,598 1,357,493 1,474,828 1,489,879 1,431,170
</TABLE>

- ---------------
(1) In August 1993, the Company sold a 9.9% interest in Asarco Australia, its
gold mining subsidiary, for $13.8 million. The sale resulted in a pre-tax
gain of $10.3 million and reduced the Company's interest in Asarco Australia
to 49.8%. As a result of this sale, the Company began to account for its
investment in Asarco Australia using the equity method. In January 1994, the
Company sold its remaining interest in Asarco Australia for $79.5 million.
The sale resulted in a pre-tax gain of $58.5 million.
(2) In the fourth quarter of 1993, the Company changed from the cost method of
accounting for SPCC to the equity method. This change followed significant
economic and political improvements in Peru that allowed the Company to
reassert its influence and act without the governmental oversight that
previously existed. As a result, $26.4 million of previously unrecognized
equity earnings for SPCC were recorded.
(3) In 1992, the Company adopted SFAS 106, "Employers' Accounting for
Postretirement Benefits Other Than Pensions". The projected benefit
obligation of $54.0 million was recognized as the cumulative effect of the
change in accounting principle as of January 1, 1992.
(4) Effective January 1, 1993, SPCC adopted SFAS 109 "Accounting for Income
Taxes". The impact of adopting this statement on SPCC was to increase
retained earnings as of January 1, 1993 and decrease deferred taxes by $165
million, the Company's share of which is $86.3 million, which is reported as
the cumulative effect of a change in accounting principle.

S-21
<PAGE> 22

MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Earnings: Asarco reported a net loss of $16.1 million, or $.39 per share,
for the third quarter ended September 30, 1994, compared with a net loss of $3.0
million, or $.08 per share, for the third quarter of 1993. Third quarter 1994
results included a previously announced $30.7 million after-tax charge, $45.5
million on a pre-tax basis, to add to the Company's reserve for environmental
matters. Excluding this provision, Asarco earned $14.6 million or $.35 per share
in the third quarter of 1994. This improvement in earnings was principally due
to higher metal prices for both copper and lead and from $13.4 million of equity
earnings from the Company's investment in Southern Peru Copper Corporation
("SPCC"). Earnings from the Company's copper operations in the third quarter of
1994 were adversely affected by lower production at the Ray mine and the sale of
higher cost copper produced in the first half of 1994, principally at the Ray
mine. Operations at the Ray mine have been adversely impacted by the effects of
the heavy rains in early 1993 and by difficult ore conditions encountered early
in 1994. The Company is now realizing lower costs at the Ray mine. These
improved costs will begin to be reflected in the fourth quarter of 1994 when
this lower cost production is sold.

Third quarter 1993 results included after-tax gains of $5.4 million from
the sale of 9.9% of Asarco Australia Limited, $2.1 million as a result of the
issuance of new shares by Asarco Australia Limited at a price exceeding the book
value of Asarco's investment and $2.3 million from a reduction of LIFO-valued
inventory. Also, as a result of the increased corporate tax rate enacted in the
Omnibus Budget Reconciliation Act of 1993, the Company recognized a $2.8 million
charge in the third quarter of 1993 to adjust its deferred income tax liability.

For the nine month period ended September 30, 1994, the Company reported
net income of $15.8 million, or $.38 per share, compared with a net loss of
$58.0 million, or $1.40 per share for the comparable 1993 period. In addition to
the third quarter environmental provision, the 1994 nine month earnings include
a gain on the sale of the Company's remaining interest in Asarco Australia
Limited of $31.9 million on an after-tax basis, $58.5 million on a pre-tax
basis. Higher metal prices and equity earnings from the Company's investment in
SPCC were offset by the provision for environmental matters. Through the third
quarter of 1993, the Company accounted for its investment in SPCC on the cost
method and results for the three month and nine month periods ended September
30, 1993 include $4.9 million and $8.8 million, respectively, of dividends
received.

Prices: Prices for the Company's metals are established principally on the
New York Commodity Exchange ("COMEX") or the London Metal Exchange ("LME").

PRICE VOLUME ANALYSIS:

<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
AVERAGE REALIZED ------------------- -------------------
PRICE 1994 1993 1994 1993
- ---------------------------------------------------- ------- ------- ------- -------
<S> <C> <C> <C> <C>
Copper (per pound).................................. $ 1.15 $ .86 $ 1.00 $ .90
Lead (per pound).................................... .30 .19 .26 .20
Silver (per ounce).................................. 5.29 4.50 5.30 4.08
Zinc(1) (per pound)................................. .44 .41 .44 .44
Gold (per ounce).................................... 386.73 368.08 384.26 354.79
</TABLE>

S-22
<PAGE> 23

<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
------------------- -------------------
SALES VOLUME 1994 1993 1994 1993
- ---------------------------------------------------- ------- ------- ------- -------
(IN THOUSANDS)
<S> <C> <C> <C> <C>
Copper (pounds)..................................... 243,566 251,388 813,316 762,336
Lead (pounds)....................................... 99,366 114,082 301,998 315,018
Silver (ounces)..................................... 9,121 7,572 24,851 24,111
Zinc(1) (pounds).................................... 58,808 54,283 183,476 152,012
Gold (ounces)....................................... 48 46 96 129
</TABLE>

- ---------------
(1) The Company's zinc mine production is sold in concentrate form. Volume
represents pounds of zinc contained in concentrate. The Company fully hedged
its zinc mine production for the nine months ended September 30, 1994 and
1993 at an average price of 47 cents per pound and 55 cents per pound,
respectively.

Hedging Activities: Substantially all of the Company's copper and lead
production is sold under annual contracts. To the extent not sold under annual
contracts, production can be sold on commodity exchanges or to merchants or
consumers on a spot sale basis. Zinc is sold in the form of concentrates under
contracts of one to three years' duration. Silver and gold are sold under
monthly contracts or in spot sales. Sales prices are generally based on the
average of prevailing commodity prices for the scheduled month of delivery or
shipment according to the terms of the contracts.

Depending on the market fundamentals of a metal and other conditions, the
Company may enter into forward sales or purchase put options or establish
synthetic put options to reduce or eliminate the risk of metal price declines on
its anticipated future production. Put options purchased by the Company
establish a minimum price for the production covered by such put options and
permit the Company to participate in price increases above the strike price of
such put options. As of September 30, 1994, the Company had copper put options
with an average strike price of 90.0 cents per pound covering 6,900 tons of 1994
production representing approximately 10% of the Company's expected fourth
quarter 1994 copper production, and copper put options with an average strike
price of 91.9 cents per pound covering 137,600 tons or approximately 48% of its
expected 1995 copper production.

Forward sales establish a selling price for future production at the time
they are entered into, thereby eliminating the risk of declining prices but also
eliminating potential gains on price increases if not bought back. Synthetic put
options are established by entering into a forward sale and purchasing a call
option for the same quantity of the relevant metal and for the time period
relating to such forward sale. The forward sale establishes a minimum price that
will be realized, while the call option permits the Company to participate in
price increases. As of September 30, 1994 the Company had synthetic put options
covering 22,700 tons of expected fourth quarter 1994 zinc production at a price
of 45.0 cents per pound.

The pre-tax effect of the Company's hedging activities net of transaction
costs for the three month and nine month periods ending September 30, 1994 and
1993 are as follows:

RESULTS OF HEDGING ACTIVITIES
(IN THOUSANDS)

<TABLE>
<CAPTION>
THREE MONTHS NINE MONTHS
ENDED ENDED
SEPTEMBER 30, SEPTEMBER 30,
---------------- -------------------
METAL 1994 1993 1994 1993
--------------------------------------------- ---- ------ ------ -------
<S> <C> <C> <C> <C>
Copper....................................... $ -- $ (149) $3,346 $ (149)
Zinc......................................... 806 4,967 2,308 10,104
Silver....................................... 85 -- 65 192
---- ------ ------ -------
Total........................................ $891 $4,818 $5,719 $10,147
==== ====== ====== =======
</TABLE>

S-23
<PAGE> 24

Sales: Sales in the third quarter of 1994 were $513.0 million, compared
with $425.2 million in the third quarter of 1993. The increase in sales
generally reflected higher metal prices for all major products. Sales for the
nine month period ended September 30, 1994 were $1,443.7 million, compared with
$1,300.8 million for the comparable 1993 period. The increase in sales for the
nine month period resulted principally from higher metal prices, increased sales
volume of copper and zinc and increased specialty chemicals sales.

Cost of Products and Services: Cost of products and services were $450.9
million in the third quarter of 1994, compared with $384.9 million in the third
quarter of 1993. The increase in costs reflected increased purchases of refined
copper to meet customer demand and higher costs in specialty chemicals due to
increased sales volumes. These cost increases were partially offset by lower
costs resulting from the sale of Asarco Australia Limited, the temporary
shutdown of the Troy silver mine in 1993 and the disposal of nonstrategic
businesses which had losses in the 1993 period. The 1993 third quarter included
a pre-tax gain of $3.5 million on the sale of LIFO inventories.

Cost of products and services were $1,294.8 million for the nine month
period ended September 30, 1994 compared with $1,217.6 million for the
comparable 1993 period. The increase in costs includes increased purchases of
refined copper to meet customer demand. The Company's cost of purchased refined
copper approximates the market price at which it is sold.

Other Expenses: Selling, administrative and other costs were $20.0 million
in the third quarter of 1994, and $59.3 million for the nine month period ended
September 30, 1994 compared to $19.8 million and $61.8 million for the
respective periods in 1993. Overhead reduction programs contributed to lower
costs in the nine month period ended September 30, 1994. Depreciation and
depletion expense decreased for the third quarter ended September 30, 1994 by
$0.8 million to $20.4 million due to the temporary shutdown of the Troy silver
mine, the sale of Asarco Australia Limited and disposal of nonstrategic
businesses. Research and exploration expenses were $5.5 million in the third
quarter of 1994 and $13.9 million for the nine months ended September 30, 1994.
The decrease of $2.1 million in research and exploration expenses for the nine
month period ended September 30, 1994 from the comparable 1993 period reflected
lower costs, primarily due to the sale of Asarco Australia Limited. The
provision (recovery) for bad debts for the nine month period ended September 30,
1994 includes a recovery of $4.0 million from the settlement of litigation
related to a bad debt written off in 1991.

In September 1994, the Company recorded a $30.7 million after-tax charge,
$45.5 million on a pre-tax basis, for environmental costs associated with the
Company's previously closed facilities and current operations. This addition to
the reserve for closed plant and environmental matters, together with prior
accruals, accommodates resolutions reached in the quarter at a number of sites,
particularly at Asarco's former smelter in Tacoma, Washington, where an
agreement on remediation remains subject to final acceptance by the EPA. Asarco
had a total reserve for environmental matters and closed operations of $130.3
million at September 30, 1994.

Nonoperating Items: Interest expense for the three month and nine month
periods ended September 30, 1994 increased by $1.4 million and $2.9 million,
respectively, over the comparable 1993 periods as a result of lower capitalized
interest due principally to the completion of the modernization project at the
El Paso copper smelter, a higher debt level and higher interest rates on short
term borrowings. Other income included dividends from SPCC of $5.2 million in
the third quarter of 1993 and $9.4 million for the nine month period ended
September 30, 1993, recorded prior to the resumption of equity accounting for
SPCC in the fourth quarter of 1993.

Third quarter 1993 results included a $10.3 million gain on the sale of a
9.9% interest in Asarco Australia Limited. The Company also recognized a $3.3
million pre-tax gain as a result of the issuance of new shares by Asarco
Australia Limited at a price exceeding the book value of Asarco's investment.

Taxes on Income (Benefit): Taxes on income for the third quarter ended
September 30, 1994 reflect tax benefits of $15.2 million on the reported loss.
The nine month period ending September 30, 1994 includes

S-24
<PAGE> 25

higher taxes on the first quarter 1994 gain on the sale of Asarco Australia
Limited. Reported earnings from the consolidated subsidiary Asarco Australia
Limited were previously treated as permanently reinvested. The tax benefit in
the third quarter and nine month period ended September 30, 1993 is net of $2.8
million of additional federal income taxes resulting from the enactment of the
Omnibus Budget Reconciliation Act of 1993, the impact of the higher effective
tax rate on the gain on the sale of the 9.9% interest in Asarco Australia
Limited.

Cash Flows: Net cash used for operating activities was $37.2 million in
the third quarter of 1994, compared with cash provided from operating activities
of $32.3 million in the third quarter of 1993. Cash invested in operating assets
and liabilities increased principally as a result of higher trade receivables
due to higher metal prices, increased in-process copper inventories and higher
advances on outside purchased raw materials inventories. Cash used for accounts
payable in the third quarter of 1994 includes changes in Company hedge positions
which represent a liability for the purchase of copper on a terminal market.
This is offset by a change in receivables for a corresponding sale on a terminal
market amounting to approximately $26 million. These positions had no impact on
net cashflow. Net cash used for investing activities in the third quarter of
1994 increased by $14.8 million over the prior year period primarily due to
capitalization of mine development costs at the Ray mine.

Net cash used for operating activities was $46.0 million for the nine month
period ended September 30, 1994, compared with cash provided from operating
activities of $47.7 million in the corresponding prior period. Cash invested in
operating assets and liabilities increased principally as a result of higher
trade receivables due to higher metal prices and increased in-process copper
inventories partially offset by an increase in trade payable financing on
outside raw material purchases. Cash provided from investing activities
increased for the nine month period ended September 1994 due to the proceeds
from the sale of Asarco Australia Limited in the first quarter and lower capital
spending reflecting completion of the El Paso smelter modernization in 1993.

Financing activities included the prepayment of the Company's 9 3/4%
Sinking Fund Debentures at par value plus a premium of .9% in the first quarter
of 1994.

Liquidity and Capital Resources: At September 30, 1994, the Company's debt
as a percentage of total capitalization was 37.8%, compared with 38.0% at
December 31, 1993. Debt at the end of the third quarter 1994 was $927.5 million,
compared with $900.5 million at the end of 1993. Additional indebtedness
permitted under the terms of the Company's revolving credit loan agreements
totaled $334 million at September 30, 1994.

The Company expects that it will meet its cash requirements for 1994 and
beyond from internally generated funds, cash on hand and borrowings under its
revolving credit agreements or additional debt financing.

USE OF PROCEEDS

The Company will not receive any of the proceeds from the sale of Common
Stock by the Selling Stockholder.

S-25
<PAGE> 26

SELLING STOCKHOLDER

The following table sets forth certain information with respect to the
beneficial ownership of Common Stock, as adjusted to reflect the sale of the
shares offered hereby by MIM. The Common Stock is the only class of equity
securities of the Company which will be outstanding after the Offering.

<TABLE>
<CAPTION>
SHARES BENEFICIALLY SHARES BENEFICIALLY
OWNED PRIOR TO OWNED AFTER
OFFERING NUMBER OF OFFERING
---------------------- SHARES BEING -------------------
SELLING STOCKHOLDER NUMBER PERCENT OFFERED FOR SALE(2) NUMBER PERCENT
- -------------------------------- ---------- ------- ------------------- ------- -------
<S> <C> <C> <C> <C> <C>
M.I.M. Holdings Limited(1)...... 10,353,363 24.6 9,500,000 853,363 2.0
</TABLE>

- ---------------
(1) The address of MIM is M.I.M. Plaza, 410 Ann Street, Brisbane, Queensland
4000, Australia.

(2) Assumes over-allotment option is not exercised. If exercised, the U.S.
Underwriters and Managers may purchase a maximum of 853,363 additional
shares of Common Stock in the aggregate to cover over-allotments.

MIM's intention to sell shares of Asarco is pursuant to a strategy of
concentrating on core businesses over which it has direct control and which are
low cost producers of the core products of those businesses.

PRICE RANGE OF COMMON STOCK AND DIVIDENDS

The principal market for Asarco's Common Stock is the New York Stock
Exchange, on which its ticker symbol is "AR". High and low closing stock prices
and dividends paid for each quarter of 1992, 1993 and 1994 to date are as
follows:

<TABLE>
<CAPTION>
PRICE
-------------- DIVIDENDS
HIGH LOW PER SHARE
----- ---- ---------
<S> <C> <C> <C>
1992
1st Quarter...................................................... 28 3/4 19 7/8 .20
2nd Quarter...................................................... 31 3/8 24 3/4 .20
3rd Quarter...................................................... 30 1/2 23 3/4 .20
4th Quarter...................................................... 25 1/4 22 1/4 .20

1993
1st Quarter...................................................... 28 5/8 23 1/2 .20
2nd Quarter...................................................... 23 1/4 17 3/4 .10
3rd Quarter...................................................... 20 1/4 16 7/8 .10
4th Quarter...................................................... 22 7/8 16 5/8 .10

1994
1st Quarter...................................................... 27 22 3/8 .10
2nd Quarter...................................................... 30 1/2 21 3/4 .10
3rd Quarter...................................................... 34 3/8 27 5/8 .10
4th Quarter (to October 26)...................................... 33 5/8 31 3/8
</TABLE>

CERTAIN U.S. FEDERAL TAX CONSIDERATIONS
FOR NON-UNITED STATES HOLDERS

The following is a general discussion of certain U.S. federal income and
estate tax consequences of the ownership and disposition of Common Stock
applicable to a holder that is not a U.S. Holder (a "non U.S. Holder"). As used
in this Prospectus Supplement, a "U.S. Holder" means a citizen or resident of
the United States, a corporation or partnership created or organized in the
United States or under the laws of the United

S-26
<PAGE> 27

States or of any State, or an estate or trust whose income is includable in
gross income for U.S. federal income tax purposes regardless of its source and a
"non-U.S. Holder" is a holder that is not a U.S. Holder. The following
discussion does not address state, local or foreign tax consequences and does
not consider specific facts and circumstances that may be relevant to a
particular non-U.S. Holder's tax position or to holders that may be subject to
special tax rules, such as tax-exempt organizations, banks, insurance companies
and holders that hold Common Stock as a position in a "straddle" or as part of a
hedging or "conversion" transaction for U.S. federal income tax purposes. The
following discussion is based on provisions of the Internal Revenue Code of
1986, as amended, and administrative and judicial interpretations as of the date
hereof, all of which are subject to change which may be retroactive. Prospective
purchasers are urged to consult a tax advisor with respect to the U.S. federal
income and estate tax consequences of owning and disposing of Common Stock as
well as any tax consequences under the laws of any other taxing jurisdictions.

FEDERAL INCOME TAX

Dividends. Except as noted in the next paragraph, dividends paid to a
non-U.S. Holder of the Common Stock will generally be subject to withholding of
U.S. federal income tax at a rate of 30%. The rate of withholding may be reduced
by applicable income tax treaty if a holder satisfies applicable certification
and other requirements.

Dividends that are effectively connected with such holder's conduct of a
trade or business in the United States or, if an income tax treaty applies, are
attributable to a permanent establishment of such holder in the United States
("Effectively Connected Dividends"), are subject to U.S. federal income tax on a
net income basis at rates applicable to U.S. citizens, resident aliens and
domestic U.S. corporations, and are generally not subject to withholding if the
non-U.S. Holder files U.S. Internal Revenue Service Form 4224 with the payor of
the dividend. Any such Effectively Connected Dividends received by a non-U.S.
Holder that is a corporation may also, under certain circumstances, be subject
to an additional "branch profits tax" at a 30% rate or such lower rate as may be
specified by an applicable income tax treaty.

Gain on Disposition of Common Stock. Except as noted below, a non-U.S.
Holder generally will not be subject to U.S. federal income tax or withholding
in respect of gain recognized on a disposition of Common Stock. Unless a treaty
exemption is applicable, gain will be subject to U.S. federal income tax if (a)
the gain from the disposition is effectively connected with a trade or business
of the non-U.S. Holder in the United States (in which case the branch profit tax
described above may also apply to a non-U.S. Holder that is a corporation), (b)
in the case of an individual non-U.S. Holder who holds the Common Stock as a
capital asset, such non-U.S. Holder is present in the United States for 183 or
more days in the taxable year in which such disposition of Common Stock takes
place and either for U.S. federal income tax purposes such non-U.S. Holder's tax
home is in the United States or such gain is attributable to an office or other
fixed place of business maintained by the non-U.S. Holder in the United States,
or (c) Asarco is or has at any time during the five-year period preceding such
disposition been a "United States real property holding corporation" for U.S.
federal income tax purposes and (assuming Common Stock is regularly traded on an
established securities market during the year of disposition) the holder held,
directly or indirectly at any time during such five-year period, more than five
percent of such Common Stock. Asarco believes that it is not, has not been and
will not become a "United States real property holding corporation."

FEDERAL ESTATE TAX

If an individual non-U.S. Holder owns, or is treated as owning Common Stock
at the time of his death, such stock will be included in his gross estate for
United States federal estate tax purposes, unless an exemption is provided in an
applicable estate tax treaty.

BACKUP WITHHOLDING AND INFORMATION REPORTING

Asarco must report annually to the Internal Revenue Service (the "Service")
and to each non-U.S. Holder the amount of dividends paid to, and the tax
withheld with respect to, each non-U.S. Holder. Currently, no other information
reporting and no backup withholding tax will apply to dividends paid on

S-27
<PAGE> 28

Common Stock to a non-U.S. Holder at an address outside the United States,
unless the payor has actual knowledge that the payee is a U.S. Holder.

Non-U.S. Holders will generally not be subject to backup withholding with
respect to payments of the proceeds of a sale of Common Stock through a foreign
office of a broker. The sale, however, must be reported to the Internal Revenue
Service if the broker is a foreign office of a U.S. broker, or a foreign office
of a foreign broker (a) that is a controlled foreign corporation for United
States federal income tax purposes, or (b) 50% or more of whose gross income
from all sources for the three-year period ending with the close of its taxable
year preceding the payment (or for such part of the period that the foreign
broker has been in existence) was effectively connected with the conduct of a
trade or business within the United States, unless such broker has documentary
evidence in its files of the non-U.S. Holder's foreign status and has no actual
knowledge to the contrary or the holder otherwise establishes an exemption.
Payments to a non-U.S. Holder by a U.S. office of a U.S. or foreign broker of
the proceeds of a sale of Common Stock are subject to both information reporting
and backup withholding at a 31% rate unless the holder certifies its non-U.S.
status in accordance with applicable certification procedures or otherwise
establishes an exemption.

Any amounts withheld from a payment to a non-U.S. Holder under the backup
withholding provisions may be refunded to the non-U.S. Holder (or credited
against that non-U.S. Holder's United States federal income tax liability, if
any), provided that the required information is furnished to the Service by the
non-U.S. Holder.

S-28
<PAGE> 29

UNDERWRITING

Under the terms and subject to the conditions contained in an Underwriting
Agreement dated , 1994 (the "U.S. Underwriting Agreement"), the
underwriters named below (the "U.S. Underwriters"), for whom CS First Boston
Corporation and S.G.Warburg & Co. Inc. are acting as representatives (the
"Representatives"), have severally but not jointly agreed to purchase from the
Selling Stockholder the following respective numbers of U.S. Shares:

<TABLE>
<CAPTION>
NUMBER OF
UNDERWRITER U.S. SHARES
-----------
<S> <C>
CS First Boston Corporation.................................
S.G.Warburg & Co. Inc.......................................

-----------
Total................................................ 6,650,000
=========
</TABLE>

The U.S. Underwriting Agreement provides that the obligations of the U.S.
Underwriters are subject to certain conditions precedent and that the U.S.
Underwriters will be obligated to purchase all the U.S. Shares offered hereby if
any are purchased. The U.S. Underwriting Agreement provides that, in the event
of a default by a U.S. Underwriter, in certain circumstances the purchase
commitments of non-defaulting U.S. Underwriters may be increased or the U.S.
Underwriting Agreement may be terminated.

The Company and the Selling Stockholder have entered into a Subscription
Agreement (the "Subscription Agreement") with the Managers of the International
Offering (the "Managers") providing for the concurrent offer and sale of the
International Shares outside the United States and Canada. The closing of the
U.S. Offering is a condition to the closing of the International Offering and
the closing of the International Offering is a condition to the closing of the
U.S. Offering.

The Selling Stockholder has granted to the U.S. Underwriters and the
Managers an option, exercisable by CS First Boston Corporation ("CSFBC"),
expiring at the close of business on the 30th day after the date of this
Prospectus Supplement, to purchase up to 853,363 additional shares at the public
offering price, less the underwriting discounts and commissions, all as set
forth on the cover page of this Prospectus Supplement. Such option may be
exercised only to cover over-allotments in the sale of the shares of Common
Stock offered hereby. To the extent that this option to purchase is exercised,
each U.S. Underwriter and each Manager will become obligated, subject to certain
conditions, to purchase approximately the same percentage of additional shares
being sold to the U.S. Underwriters and the Managers as the number of U.S.
Shares set forth next to such U.S. Underwriter's name in the preceding table
bears to the total number of U.S. Shares in such table and as the number set
forth next to such Manager's name in the corresponding table in the Prospectus
Supplement relating to the International Offering bears to the total number of
International Shares in such table.

The Company and the Selling Stockholder have been advised by the
Representatives that the U.S. Underwriters propose to offer the U.S. Shares in
the United States and Canada to the public initially at the

S-29
<PAGE> 30

public offering price set forth on the cover page of this Prospectus Supplement
and, through the Representatives, to certain dealers at such price less a
concession of $ per share, and the U.S. Underwriters and such dealers
may allow a discount of $ per share on sales to certain other dealers.
After the initial public offering, the public offering price and concession and
discount to dealers may be changed by the Representatives.

The public offering price, the aggregate underwriting discounts and
commissions per share and per share concession and discount to dealers for the
U.S. Offering and the concurrent International Offering will be identical.
Pursuant to an Agreement between the U.S. Underwriters and Managers (the
"Intersyndicate Agreement") relating to the Offerings, changes in the public
offering price, concession and discount to dealers will be made only upon the
mutual agreement of the Representatives, and CS First Boston Limited ("CSFBL")
on behalf of the Managers.

Pursuant to the Intersyndicate Agreement, each of the U.S. Underwriters has
agreed that, as part of the distribution of the U.S. Shares and subject to
certain exceptions, it has not offered or sold, and will not offer or sell,
directly or indirectly, any shares of Common Stock or distribute any prospectus
relating to the Common Stock to any person outside the United States or Canada
or to any other dealer who does not so agree. Each of the Managers has agreed or
will agree that, as part of the distribution of the International Shares and
subject to certain exceptions, it has not offered or sold, and will not offer or
sell, directly or indirectly, any shares of Common Stock or distribute any
prospectus relating to the Common Stock in the United States or Canada or to any
other dealer who does not so agree. The foregoing limitations do not apply to
stabilization transactions or to transactions between the U.S. Underwriters and
the Managers pursuant to the Intersyndicate Agreement. As used herein, "United
States" means the United States of America (including the States and the
District of Columbia), its territories, possessions and other areas subject to
its jurisdiction, "Canada" means Canada, its provinces, territories, possessions
and other areas subject to its jurisdiction, and an offer or sale shall be in
the United States or Canada if it is made to (i) any individual resident in the
United States or Canada or (ii) any corporation, partnership, pension,
profit-sharing or other trust or other entity (including any such entity acting
as an investment adviser with discretionary authority) whose office most
directly involved with the purchase is located in the United States or Canada.

Pursuant to the Intersyndicate Agreement, sales may be made between the
U.S. Underwriters and the Managers of such number of shares of Common Stock as
may be mutually agreed upon. The price of any shares so sold will be the public
offering price, less such amount as may be mutually agreed upon by the
Representatives, and CSFBL on behalf of the Managers, but not exceeding the
selling concession applicable to such shares. To the extent there are sales
between the U.S. Underwriters and the Managers pursuant to the Intersyndicate
Agreement, the number of shares of Common Stock initially available for sale by
the U.S. Underwriters or by the Managers may be more or less than the amount
appearing on the cover page of this Prospectus Supplement. Neither the U.S.
Underwriters nor the Managers are obligated to purchase from the other any
unsold shares of Common Stock.

This Prospectus Supplement and the accompanying Prospectus may be used by
underwriters and dealers in connection with sales of International Shares in the
United States, to the extent such sales are permitted by the contractual
limitations on sales described above.

CSFBC has agreed with MIM and the Company to use its best efforts to
arrange as wide a distribution as reasonably practicable of the Common Stock
offered hereby. Accordingly, in the absence of the prior consent of the Company,
CSFBC has agreed not to: (i) sell more than 1,000,000 shares of Common Stock to
any purchaser; (ii) sell any shares of Common Stock to any person or group who
has filed a Schedule 13-D with respect to the Company continuing to reflect
ownership of more than 5% of the Company's Common Stock; or (iii) sell any
shares of Common Stock to any purchaser that CSFBC is aware is acting in concert
with any other person for the purpose of acquiring more than 1,000,000 shares of
Common Stock in the Offerings.

Each of the Company and the Selling Stockholder have agreed that they will
not offer, sell, contract to sell, announce its intention to sell, pledge or
otherwise dispose of, directly or indirectly, or file with the Securities and
Exchange Commission a registration statement under the Act relating to, any
additional shares of Common Stock or securities convertible or exchangeable into
or exercisable for any shares of Common

S-30
<PAGE> 31

Stock without the prior written consent of CSFBC for a period of 60 days after
the date of this Prospectus Supplement other than issuances and sales of Junior
Preferred Stock in accordance with the terms of the Company's Shareholder Rights
Plan or pursuant to any employee or director stock option plan, stock ownership
plan, savings plan, stock bonus plan, stock compensation plan or dividend
reinvestment plan of the Company as in effect on the date of this Prospectus
Supplement.

The Company and the Selling Stockholder have agreed to indemnify the U.S.
Underwriters and the Managers against certain liabilities, including civil
liabilities under the Act, or to contribute to payments that the U.S.
Underwriters and the Managers may be required to make in respect thereof. The
Company has agreed to pay certain costs and expenses of the Selling Stockholder
in respect of the Offerings and to indemnify the Selling Stockholder against
certain liabilities, including civil liabilities under the Act, with respect to
the Offerings.

In the ordinary course of their business, the Representatives and their
affiliates have engaged, and may engage in the future, in investment banking and
commercial banking transactions with the Company for which they have received
customary fees. CSFBL and Credit Suisse, affiliates of CSFBC, are the agent and
a lender, respectively, under one of the Company's revolving bank credit
agreements. S.G.Warburg & Co. Inc. and its affiliates have advised Asarco on
certain corporate finance matters from time to time.

S-31
<PAGE> 32

NOTICE TO CANADIAN RESIDENTS

RESALE RESTRICTIONS

The distribution of the Common Stock in Canada is being made only on a
private placement basis exempt from the requirement that the Company prepare and
file a prospectus with the securities regulatory authorities in each province
where trades of Common Stock are effected. Accordingly, any resale of the Common
Stock in Canada must be made in accordance with applicable securities laws which
will vary depending on the relevant jurisdiction, and which may require resales
to be made in accordance with available statutory exemptions or pursuant to a
discretionary exemption granted by the applicable Canadian securities regulatory
authority. Purchasers are advised to seek legal advice prior to any resale of
the Common Stock.

REPRESENTATIONS OF PURCHASERS

Each purchaser of Common Stock in Canada who receives a purchase
confirmation will be deemed to represent to the Company, the Selling Stockholder
and the dealer from whom such purchase confirmation is received that (i) such
purchaser is entitled under applicable provincial securities laws to purchase
such Common Stock without the benefit of a prospectus qualified under such
securities laws, (ii) where required by law, that such purchaser is purchasing
as principal and not as agent, and (iii) such purchaser has reviewed the text
above under "Resale Restrictions".

RIGHTS OF ACTION AND ENFORCEMENT

The securities being offered are those of a foreign issuer and Ontario
purchasers will not receive the contractual right of action prescribed by
section 32 of the Regulation under the Securities Act (Ontario). As a result,
Ontario purchasers must rely on other remedies that may be available, including
common law rights of action for damages or rescission or rights of action under
the civil liability provisions of the U.S. federal securities laws.

All of the issuer's directors and officers as well as the experts named
herein may be located outside of Canada and, as a result, it may not be possible
for Ontario purchasers to effect service of process within Canada upon the
issuer or such persons. All or a substantial portion of the assets of the issuer
and such persons may be located outside of Canada and, as a result, it may not
be possible to satisfy a judgment against the issuer or such persons in Canada
or to enforce a judgment obtained in Canadian courts against such issuer or
persons outside of Canada.

NOTICE TO BRITISH COLUMBIA RESIDENTS

A purchaser of Common Stock to whom the Securities Act (British Columbia)
applies is advised that such purchaser is required to file with the British
Columbia Securities Commission a report within ten days of the sale of any
Common Stock acquired by such purchaser pursuant to this offering. Such report
must be in the form attached to British Columbia Securities Commission Blanket
Order BOR #88/5, a copy of which may be obtained from the Company. Only one such
report must be filed in respect of Common Stock acquired on the same date and
under the same prospectus exemption.

S-32
<PAGE> 33

INSIDE BACK COVER

[PHOTOGRAPH: ORE LOADING AND HAULING EQUIPMENT AT RAY MINE]

[PHOTOGRAPH: GRINDING MILL AT RAY CONCENTRATOR]

[PHOTOGRAPH: TANKHOUSE AT AMARILLO COPPER REFINERY]

<PAGE> 34

- ------------------------------------------------------

NO DEALER, SALESPERSON OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATION NOT CONTAINED IN THIS PROSPECTUS
SUPPLEMENT OR THE PROSPECTUS AND, IF GIVEN OR MADE, SUCH INFORMATION OR
REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY,
THE SELLING STOCKHOLDER OR ANY UNDERWRITER. THIS PROSPECTUS SUPPLEMENT AND THE
PROSPECTUS DO NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO
BUY ANY OF THE SECURITIES OFFERED HEREBY IN ANY JURISDICTION TO ANY PERSON TO
WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER IN SUCH JURISDICTION. NEITHER THE
DELIVERY OF THIS PROSPECTUS SUPPLEMENT OR THE PROSPECTUS NOR ANY SALE MADE
HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THE
INFORMATION HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO THE DATE HEREOF OR
THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE COMPANY SINCE SUCH DATE.
------------------
TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
------
<S> <C>
PROSPECTUS SUPPLEMENT
Prospectus Supplement Summary........ S-3
The Company.......................... S-6
Summary of Metals Markets............ S-16
Recent Developments.................. S-19
Capitalization....................... S-20
Selected Consolidated Financial
Information........................ S-21
Management's Discussion and Analysis
of Financial Condition and Results
of
Operations......................... S-22
Use of Proceeds...................... S-25
Selling Stockholder.................. S-26
Price Range of Common Stock and
Dividends.......................... S-26
Certain U.S. Federal Tax
Considerations for Non-United
States Holders..................... S-26
Underwriting......................... S-29
Notice to Canadian Residents......... S-32

PROSPECTUS
Available Information................ 2
Incorporation of Certain Documents
by Reference....................... 2
The Company.......................... 3
Use of Proceeds...................... 3
Ratio of Earnings to Fixed Charges... 3
Selling Stockholder.................. 4
Description of Common Stock.......... 5
Description of Preferred Stock....... 5
Description of Preferred Share
Purchase Rights.................... 7
Description of Depositary Shares..... 8
Description of Debt Securities....... 10
Description of Warrants.............. 21
Corporate Provisions................. 25
Plan of Distribution................. 26
Experts.............................. 27
Legal Matters........................ 28
</TABLE>

- ------------------------------------------------------

ASARCO
Incorporated

9,500,000 Shares

Common Stock

(No par value)

PROSPECTUS SUPPLEMENT

CS FIRST BOSTON

S.G. WARBURG & CO. INC.

- ------------------------------------------------------