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 Business News | August 2007 
Grupo Mexico's Cananea Copper Pit Closed by Strike
 Reuters
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Mexico City - Strikes have closed Grupo Mexico's giant Cananea copper mine in northern Mexico and two smaller mines, a top executive said on Tuesday.
The company said it expects the Mexican government to declare the stoppages illegal.
Xavier Garcia, who heads Grupo Mexico's Mexican mining division, said the mines were "totally stopped right now" but that operations should resume in two days. Last year Cananea, which is close to the U.S. border, produced an average of more than 450 tonnes of copper a day.
Workers at the three mines walked off the job on Monday in a conflict over contracts and safety related to long-running friction between the union and the company.
Grupo Mexico's general counsel Alberto de la Parra said he was waiting for the strikes to be declared illegal.
"We expect to receive, from the appropriate authorities, the annulment of the strikes," Grupo Mexico's de la Parra told a conference call with investors.
Mexico's labor ministry has the power to rule on the legality of strikes. In June, the ministry prohibited an attempt by the union to close Grupo Mexico's operations.
Grupo Mexico's San Martin copper mine and Taxco lead and silver mine were also closed by the conflict, which is over contracts and safety but related to long-running friction between union boss Napoleon Gomez and the company.
The leader left Mexico in 2006 after the government and dissident members accused him of corruption. Gomez took over the helm of the union from his father, who headed it for decades.
Gomez has clashed with Grupo Mexico for years, partly over distribution of $55 million the union won from the company in a deal related to the privatization of Cananea.
Relations worsened after an explosion in a Grupo Mexico coal shaft killed 65 men in 2006.
Cananea, one of the world's largest copper reserves, has a long history of labor activism. In a strike there a century ago, 19 workers were killed, their deaths spawning Mexico's labor movement and paving the way for the 1910 Mexican Revolution.
This time around, many opposed the strike. With copper prices at the top end of a cycle, some workers would prefer to keep the mine running to take full advantage of a lucrative profit sharing scheme.
Copper for September delivery (HGU7: Quote, Profile, Research) rose 1.55 percent on Tuesday to $3.6440 a lb on the New York Mercantile Exchange's COMEX division.
Cananea produced 164,000 tonnes of copper last year when the power struggle in the union led to months of strikes.
Grupo Mexico aims to increase the mine's output to 438,000 tonnes over the next five years by building new processing plants.
Garcia said the Mexico City-based miner had three to four weeks of smelting inventories.
The company's shares (GMEXICOB.MX: Quote, Profile, Research) rose 2.37 percent on Tuesday, to 77.8 pesos a share, adding to Monday's 2 percent gain. Grupo Mexico stock has almost doubled in value this year.
Last week, the company posted a 48.6 percent increase in second-quarter net profit to $524.8 million. |
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