Mexico's Cananea Mine May Restart In 6-7 Months - Minister

MEXICO CITY, Jul 01, 2010 (Dow Jones Commodities News via Comtex) -- 

Mexican Labor Minister Javier Lozano said Thursday that the country's largest copper mine at Cananea could resume operations in six or seven months after being shut for three years by a labor dispute.

Lozano said he met recently with top officials of mine owner Grupo Mexico SAB (GMEXICO.MX) and was told the company expects to spend about $120 million to rehabilitate the copper complex. Production could resume late this year or early next year.

Workers seized the complex three years ago and shut down production in what started out as a labor dispute and evolved into a drawn-out legal battle between the company and union leaders.

Police moved in a month ago and retook the mine after the miners lost a series of court decisions.

The timeline for restarting the mine is slightly less optimistic than that offered by the company and Lozano about a month ago.

Lozano said local, state and federal governments are spending millions of dollars on a series of public works projects to upgrade infrastructure in and around Cananea, which is located in northwestern Sonora state near the Arizona border. Those investments are in addition to Grupo Mexico's outlay for its own facilities.

As part of those efforts, Lozano said, 1,750 local workers have been hired by private contractors.

He said miners didn't plant explosives throughout the mining complex as they said they had. Union leaders in April threatened to blow up the mine rather than allow police to enter.

The union said this week that its legal fight to maintain its collective contract with the mine owner continues, despite a ruling by the Supreme Court against the union that led to the return of the mine to Grupo Mexico.

Of the 1,280 unionized Cananea workers, about 450 have picked up their severance pay so far, Lozano said, adding he expected only about 350 hard-core holdouts.

Lozano said Grupo Mexico reiterated its plans to increase copper output at the mine from about 190,000 tons a year to 460,000 tons, and to build new processing facilities and a power plant over the next five years.

The United Steelworkers union has been supporting the striking Cananea workers, and recently signed a joint statement of solidarity with miners' union leader Napoleon Gomez Urrutia.

Gomez Urrutia has been living in Canada for about four years after the government charged him with misappropriating union funds. The union says the accusations were trumped up, and part of an anti-union stance by the pro-business National Action Party, which came to power in 2000.