Striking Miners Must Leave Cananea - Mexican Court

MEXICO CITY, Feb. 22 -- A Mexican court ruled on Thursday that the massive Cananea copper mine was in force majeure, allowing mine owner Grupo Mexico to terminate the contracts of the workers who have been on strike for more than two years.

In a big win for the company, the court sided with Grupo Mexico (GMEXICOB.MX), which has argued the mine was inoperable and in force majeure because of damage sustained from neglect and sabotage since the strike began in July 2007.

"The collective bargaining contract with the mining union from today on does not exist," Grupo Mexico lawyer Cristina Rocha said. "They have to turn over the installations at the Cananea mine," Rocha said.

Union lawyer Carlos de Buen said the decision was final.

Workers originally laid down tools at Grupo Mexico's largest copper mine over health and safety concerns, but the drawn out labor battle has been complicated by a dispute between the company and the union's leader, Napoleon Gomez.

Gomez is living in Canada to avoid arrest on corruption charges in Mexico. He claims the charges have been fabricated because of his work in defense of workers' rights.

Grupo Mexico says the striking miners have damaged equipment, electricity and water systems at the mine while it has been closed, but the union denies any wrongdoing.

Mexico's mining chamber estimates the company has lost $3 billion because of the strike.

VIOLENCE FEARED

The union, which represents the 1,100 strikers, says it will not give up.

"Of course we will not leave the mine installations," union spokesman Javier Zuniga told Reuters.

"We will respond with our hands to any aggression by the security forces ... we are in red alert," Zuniga said.

Sporadic violence has occured in the past, and some union sections have staged walkoffs at other mines in the past in support of the Cananea workers.

Grupo Mexico recently requested the Mexican army enter the mine site to remove dangerous explosives, a move the union labled an act of intimidation.

At the beginning of this year Grupo Mexico made a fresh offer to buy out unionized workers, but the union said it would not accept the money. The company says it would be willing to hire back some workers under a new contract when the mine is reopened.

Grupo Mexico's Chief Financial Officer Daniel Muniz said in a conference call earlier this week that the mine could be up and running by the second quarter of this year with an investment of $50 million to $60 million.