PDAC-UPDATE 3-Grupo Mexico mine back to full production in April

Tue Mar 8, 2011 4:30pm EST

* Says Cananea ramp-up is at 75 pct, will be 100 pct in Apr

* Sees production at capacity 190,000 tonnes/yr in 2012

* New expansion at Cananea to nearly double output

* Copper prices could start to slip next year

(Adds details on expansion, copper prices, China)

By Pav Jordan

TORONTO, March 8 (Reuters) - Grupo Mexico (GMEXICOB.MX) expects its Cananea copper mine, Mexico's largest, to reach 100 percent production capacity in April as it returns to full operations after a three-year strike that ended in 2010.

Grupo Mexico Chief Operating Officer Xavier Garcia de Quevedo told Reuters on the sidelines of the Prospectors and Developers (PDAC) mining conference in Toronto that Cananea cathode production was at 100 percent, while concentrate output was between 55 percent and 60 percent.

"We hope to be at 100 percent installed capacity in the month of April," Garcia de Quevedo said at a PDAC presentation hosted by the Mexican economy ministry.

Cananea is a massive open pit copper mine in northern Mexico that has enough copper to stay in production for at least seven decades.

A workers' strike that began in July 2007 closed the mine and cost the company some 530,000 tonnes of production, or some $3.5 billion, before it was ended last year with the help of police intervention.

"The reconstruction work at Cananea is 80 percent complete," Garcia de Quevedo said before an address to investors at the headquarters of the Toronto Stock Exchange.

"What we still have to do, for example, is complete the reconstruction of the electrical systems, above all the instrumentation systems."

<^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^

For more stories on PDAC convention: [ID:nN02153893]

^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>

Grupo Mexico has embarked on a multibillion expansion project at the mine near the U.S.-Mexico border, and expects to more than double output there by adding production in concentrates and cathodes.

Garcia de Quevedo said the expansion should be fully implemented by the first quarter of 2015, with new SX/EW (solvent extraction/electrowinning) copper cathode production coming on ahead of new concentrate capacity.

COPPER PRICES

Expansion is underway at a time when copper is near record highs on the back of booming demand in China, India and other emerging economies, which need the metal to feed infrastructure development.

Garcia de Quevedo expects prices to remain solid this year, even though China copper demand has slipped.

Copper suffered its biggest one-day decline in nearly four months on Monday, as rising oil prices and geopolitical instability fanned recovery doubts and Chinese measures to tackle inflationary pressures dimmed prospects for demand.

"There is a bit of a slowdown in Chinese demand," said Garcia de Quevedo, whose company sells about 2 percent of its supply to Chinese customers.

"The way we see it is that in 2012, prices could start to adjust downward." (Reporting by Pav Jordan; editing by Janet Guttsman)

Comments (0)
This discussion is now closed. We welcome comments on our articles for a limited period after their publication.