Asarco’s hope to come out of Chapter 11 bankruptcy protection owned by Sterlite Industries was dealt a setback when the prospective new owner said it could no longer afford the $2.6 billion price due to the credit crisis and significant decline in copper prices.

The bankruptcy court ordered mediation hearings to take place in Corpus Christi, Texas, Oct. 30 and 31 followed by a court status conference Nov. 4 to discuss what happens next in Asarco’s reorganization.

Sterlite said it is still interested in pursuing the acquisition but lawyers for the company told Bloomberg News there would have to be a price reduction of "hundreds of millions of dollars."

Asarco’s current owner — but whose management the bankruptcy court has replaced — Grupo Mexico has been fighting to win back control of the company with a $2.7 billion plan.

Federal environmental and labor union officials, as well as Asarco’s current management, have favored the Sterlite bid.