Commodity Blog

Grupo Mexico said on Wednesday its Southern Copper mining division would produce 635,000 tonnes of copper in 2008, 7.3 percent more than in 2007, as the giant Cananea mine recovers from a long strike.
The company (GMEXICOB.MX), which has mining operations in Mexico and Peru, said it would also produce just under 15,000 tonnes of molybdenum this year.
A drawn-out strike last year, declared illegal by a government labor board earlier this month, cut off production at the Cananea pit for five months. The mine is now slowly reopening with a skeleton staff.
“Considering the expected ramping up of operations, Cananea copper production is estimated at around 136,000 tonnes in 2008, 38 percent higher than the 99,000 tonnes produced in 2007,” Grupo Mexico Chief Financial Officer Daniel Muniz told a conference call with investors.
At those levels, the mine would account for about one-fifth of the company’s total copper output this year.
“We are aiming to have full production from May this year,” said Muniz of its Cananea operations.
The mining group said overall copper production in 2007 was 592,000 tonnes, 2 percent lower than in 2006, a year also affected by strikes.
On Monday, the company posted a 54 percent slump in fourth-quarter net profit to $207 million compared to $453 million a year earlier.
Grupo Mexico’s revenue in the October-to-December period was $1.558 billion, down 17 percent from a year earlier, largely due to the protracted work stoppage.
The company has “a positive copper price outlook for 2008,” as increased supply from new copper projects will offset lower production at existing plants due to technical and labor problems, said Muniz.
Shares of Grupo Mexico, which have been volatile this year due to higher copper prices and the Cananea strike, were down 0.06 percent to 62.27 pesos in mid-day trading.