Mexico

MEXICO

Grupo Mexico Closes Copper and Zinc Mine as Strike Lingers

May 10 (Bloomberg) -- Grupo Mexico closed its San Martin copper and zinc mine after the company failed to end a strike that has halted production since March, spokesman Juan Rebolledo said in a television interview.

``It's impossible to even hope that this is going to be resolved,'' Rebolledo said today in an early-morning interview on TV Azteca. ``That's why we closed it.''

Lost production from San Martin and Grupo Mexico's La Cardidad mine have helped curb global copper supplies. The metal traded today at a record on the London Metal Exchange as some analysts forecast production this year will lag behind demand.

Mexican state governments have refused to break up strikes at company mines. Federal authorities and Mexico City-based Grupo Mexico have declared the protests illegal.

``The company expects the law be applied,'' said Xavier Garcia de Quevedo, Chief Operating Officer of the company's Southern Copper Corp. unit.

Grupo Mexico's Minera Mexico unit is producing 10 percent less because of strikes. Grupo Mexico is trying to meet customer demand by purchasing raw concentrates, a raw material, and refining it at plants with spare capacity, Garcia also said on TV Azteca.

``Given the scarcity of copper at the world level, it's affecting the productive chain,'' Garcia said.

Grupo Mexico may forego making investments while the strikes continue, Rebolledo said. The company had plans to invest more than $600 million in Mexico this year.

``When the conditions improve, then the investment will flow,'' Rebolledo said.

La Caridad, the company's second largest mine, employs 1,800 miners. San Martin employs more than 700, Garcia said.

Mining families had to move out of the neighborhood nearest San Martin on concern of ``insecurity'' in the area, Rebolledo said. Garcia said the union was using about 20 armed people to block the mine.