MEXICO CITY, Jun 08, 2010 (Dow Jones Commodities News via Comtex) --
Labor Minister Javier Lozano said Tuesday that Mexico's largest copper mine, Cananea, could reopen in six months after police removed striking miners who had seized the mine nearly three years ago.
Speaking at a news conference, Lozano said that based on his talks with executives from Cananea's owner, Grupo Mexico SAB (GMEXICO.MX), the rehabilitation of the mine and other facilities would cost the company about $220 million.
Lozano said that "starting today" about 2,000 people will be hired to repair the mine and for public works projects, including road upgrades to be paid by the local and federal governments.
Cananea miners can start picking up severance checks under the terms of the collective labor contract between the union and the company, he said.
Lozano told reporters that miners who previously worked at Cananea will be eligible to apply for their old jobs, although Grupo Mexico will decide who it rehires.
The National Mining and Metal Workers Union has called on organized labor to protest what it called a setback for labor rights and an illegal police action.
The union had said in April, after it lost its final appeal before the supreme court, that it would use explosives to destroy Cananea if police entered the mine.
Ixe brokerage said in a note Tuesday that Grupo Mexico's recovery of Cananea--which represents about a quarter of its total copper production capacity--makes the shares attractive.
Ixe, which has a buy rating on Grupo Mexico shares and a year-end price target of 45.50 pesos ($3.53), said Cananea should start operating again in the fourth quarter. Grupo Mexico's B shares rose 4.2% to close at MXN29.37 on Tuesday.
Mining and railroad concern Grupo Mexico owns Cananea through its subsidiary Southern Copper Corp. (SCCO, SCCO.VL).
Cananea miners went on strike in July 2007, effectively shutting down Mexico's No. 1 copper mine with annual capacity of 180,000 tons of copper.
Initially, it appeared the work stoppage--not uncommon in the Mexican mining industry--would be settled quickly.
However, it digressed into a power struggle between Grupo Mexico and the union leadership that slowly worked its way through the courts.
Grupo Mexico won a series of legal battles to recover the mine, including a supreme court ruling in April that shot down the union's final attempt to maintain its collective contract with the company.
Lawyers for the mining company successfully argued before different tribunals and labor regulators that the strike had made the mine inoperable, therefore nullifying the union's collective contract.
Lozano said that Sunday's eviction of some 50 miners blocking two entrances to the Cananea facility was carried out by 200 unarmed federal police who used tear gas.
The government said there were no injuries in the eviction operation, although the union disputed that claim, saying several miners suffered injuries. A fire that broke out at a warehouse was extinguished and local police arrested several suspects.
Lozano said that since "security and hygiene" issues prompted the initial conflict some three years ago, the government will be "absolutely strict" with Grupo Mexico as it prepares to resume operations.
"I will lead the first [inspection] brigade," he said.