The tale of ASARCO's rise and fall reflects much about the past and present state of the American mining industry. Although the American Smelting & Refining Company was founded in 1899, its roots actually go back two decades earlier to Leadville's silver boom and the business acumen of an investor named Meyer Guggenheim. In 1847, Guggenheim, then 19 years old and flat broke, had emigrated from his native Switzerland to Philadelphia where he worked as a tailor. After establishing his own shop, he branched out into selling general merchandise, importing Swiss lace and East Indian spices, and dabbling in railroad stocks. By the late 1870s, just as Leadville's silver strikes began making national headlines, Meyer Guggenheim had used his sharp eye for business opportunities to amass a small fortune.

IN 1879, two of Guggenheim's Philadelphia business associates, bitten by the silver-mining bug, ended up in Leadville, where they found a risky but interesting opportunity in the unproven A. Y. silver mine in California Gulch. Unable to invest themselves, they informed their friend Guggenheim who bought a half-interest in the A. Y. for $5,000--sight unseen. When Guggenheim visited Leadville the following year to inspect his still-unproductive mine, he also bought the adjacent Minnie claims.

Soon after returning to Philadelphia, Guggenheim learned by telegram that his A. Y. miners had blasted into "mineral" -- massive veins containing 1,200 pounds of lead and 18 troy ounces of silver per ton. As luck would have it, these veins also extended to the Minnie. The A. Y. and Minnie soon began turning a clear profit of $2,000 per day and would continue to do so for the next decade.

By 1887, Guggenheim and his seven sons owned several Leadville mines, along with the Arkansas Valley Smelter. Even the silver-market crash of 1893 did not slow the steady growth of the Guggenheim metals empire. Despite silver mines closing all around them, the family acquired some failed Leadville smelters for pennies on the dollar and incorporated them into their Arkansas Valley Smelter. Then they built a modern and highly efficient smelter at Pueblo, Colorado, importing silver concentrates and high-grade ores from Mexico at bargain prices, and dumping the recovered silver at a good profit on the depressed U.S. silver market. When federal legislation ended that practice, they built two similar smelters in Mexico and sold the recovered silver on the world market.

In 1899, American smelting interests were divided into two opposing groups. The Guggenheims headed the smaller of the two. The other was the American Smelting & Refining Company, just founded by a consortium of powerful mining and smelting interests which had pooled their considerable resources. Anxious to monopolize the smelting industry, AS&R invited the Guggenheims into its fold. But dissatisfied with the terms, the Guggenheims refused.

During 1900, the two groups engaged in head- to-head competition. AS&R's 20 smelters and refineries posted a profit of $3.5 million. The Guggenheims, with just three far more efficient and better-managed smelters, cleared $3.6 million--which they used to buy up AS&R shares. Realizing that they had been beaten at their own game, AS&R's directors grudgingly invited the Guggenheims in on their own terms. Daniel Guggenheim became chairman of the board and the executive committee of the American Smelting & Refining Company, while four of his brothers were seated as directors.

MEYER GUGGENHEIM died in 1905, pleased and proud that his sons had already turned AS&R into a major economic force. The company first monopolized the Mexican mining industry, then built a string of new smelters to cement its prominence in the U.S. By the 1950s, AS&R had gained control of American lead and zinc smelting, greatly expanded its copper operations, and opened its first big, open-pit copper mine in Arizona. By 1955, most mining companies had already abandoned the fading Leadville Mining District, leaving AS&R's venerable Arkansas Valley Smelter short of ore. But instead of joining the exodus, AS&R got together with the Resurrection Mining Company, forming a joint venture that sank the Irene Shaft deeper than any previous district mine to find new lead-zinc-silver-gold ore. But two years later, collapsing metal prices forced cancellation of mining plans and the shutdown of the Arkansas Valley Smelter, Lake County's longest continuing business and Colorado's last smelter.

AS&R scrapped the smelter (located in Stringtown, just south of Leadville) in 1961. Nevertheless, the company continued exploration in the Leadville district, striking another multi-metal ore body upon which the Black Cloud Mine would begin production a decade later.

In 1967, AS&R encountered one of its first major setbacks when the Mexican government ordered the company to sell off its majority interest in its numerous Mexican properties. AS&R complied, reducing ownership of its Mexican mines and smelters to 34 percent. The new majority owner of these properties was Grupo Mexico, then an obscure organization with no previous track record--but one that would come back to haunt AS&R.

The 1970s were heady times for the big American mining companies which still provided much of the world's base-metal supply. Strong metal prices were generating high profits, which at the time seemed to justify the greater debt loads rapidly accruing from aggressive expansion and diversification at home and abroad.

AS&R was a perfect example. Now operating under its new corporate acronym ASARCO, the company acquired a majority interest in the Southern Peru Copper Corporation, owner of Peru's world-class Cuajone copper mine. It also modernized its big smelters in Arizona and Texas, while continuing to acquire new domestic copper properties.

But when silver and base-metal prices collapsed in the early 1980s, the bright future of ASARCO and many of its corporate peers suddenly dimmed. Already stung by Mexican nationalism, ASARCO now faced sharply reduced earnings that strained its heavy debt obligations. Meanwhile, increasingly high domestic operating costs continued to compromise its competitiveness in an emerging global mineral market dominated by low-cost, foreign producers. But all of these problems would pale before one that was just rearing its head.

When the EPA arrived in Leadville in 1983, it immediately added California Gulch to its new Superfund cleanup list. Under the authority of the Comprehensive Environmental Response Compensation Liability Act, the EPA began seeking "potentially responsible parties" to share in what would prove to be huge environmental-cleanup costs. To no one's surprise, ASARCO, with its active mining presence and long history in Leadville, headed the list. California Gulch would cost ASARCO tens of millions of dollars, and that was only the beginning. Soon ASARCO also found itself wide open to similar environmental liabilities at some 20 sites across the country.

FROM ALL APPEARANCES, ASARCO was still an industry giant in the mid-1990s. With 12,000 employees, the now fully integrated copper producer had recently expanded its holdings into Montana and Idaho. But the company's real money-maker remained its 54-percent interest in the Southern Peru Copper Corporation, which regularly turned a $50-million annual profit.

But the other side of the corporate ledger was frightening. ASARCO was wallowing in debt and losing $100 million each year. And its directors had no idea how to begin to address the company's environmental liabilities that by then had topped 400 million dollars.

By 1999, ASARCO was overdue for a takeover. The company first tried to save itself through a friendly merger with Cyprus-AMAX Minerals (then owner of the Climax and Henderson molybdenum mines). Those hopes were dashed when the Phelps Dodge Corporation, a Phoenix-based copper giant, bought out Cyprus AMAX and made its own takeover bid for ASARCO. But then a new player arrived on the scene--Grupo Mexico, the same folks who had assumed the majority interest in ASARCO's Mexican holdings three decades earlier.