* Sales in fourth quarter, year, up on copper production
* Profit in dollar terms flat due to metals prices in Q4
* Capex increases in mining and infrastructure in 2012
MEXICO CITY, Feb 9 Mexican copper miner
and railroad operator Grupo Mexico posted a flat profit in
dollar terms in the fourth quarter due to lower metals prices,
although sales rose on increased production at its flagship
Net profit in dollars - the currency in which the company
makes most of its sales - was $559 million in the quarter, only
a 0.2 percent increase from the same period a year ago using an
exchange rate calculated by the company.
"Copper prices, and those for most commodities, experienced
significant lows, when compared with (the fourth quarter of
2010)," the company said in a report. "This was a result of low
expectations for demand due mainly to the European debt crisis
and also lower global growth expectations."
But Grupo Mexico expects copper prices to recover on strong
demand from China.
A weak peso could also have hit the company's bottom line.
Sales in the fourth quarter reached $2.49 million, a 7.6
percent increase from 2010, as output at the massive Cananea
mine in northern Mexico - now renamed Buenavista - ramped up
after a three-year labor stoppage.
That led to a 25 percent increase in 2011 revenue.
Buenavista produced 172,488 tons of copper last year,
soaring from the 20,696 tons of output in 2010, when Grupo
Mexico retook control of the historic pit with the help of
federal police and began work again with contractors.
The national miners union went on strike in July 2007
costing the company around 530,000 tonnes of production, or some
$3.5 billion. After a bitter court battle, the walkout was ruled
illegal, a claim the union still contests.
This year, copper production is expected to return to full
capacity at the mine, reaching 180,000 tons, and the company
plans to reassign equipment from its Tia Maria operations in
Peru to expand the SX/EW plant from 88,000 to 120,000 tons.
Grupo Mexico also runs mines in Peru and the United States.
The Peruvian Tia Maria mine has been put on hold because of
protests about the project's environmental
Moving equipment from Tia Maria to Buenavista would cut
delivery time by up to 18 months, Grupo Mexico said.
"This expansion program will increase the current capacity
of the plant at Buenavista from 180,000 tons of copper per year
to 488,000 tons by 2015, instead of the 455,000 tons that would
have been the case without the Tia Maria equipment," the
Quarterly earnings before interest, tax, depreciation and
amortisation (EBITDA) were $1.24 million, a 3.3 percent rise
from the fourth quarter in 2010.
Grupo Mexico reports its earnings in peso terms first to the
Mexican stock exchange, showing a quarterly profit of 7.9
billion pesos, a rise of some 33.5 percent on the previous year,
and revenues of 34.3 billion pesos in the fourth quarter.
The company plans $1.746 billion in capital expenditures for
its mining division this year, mostly on expansions at
Buenavista, and sees record investment in its infrastructure
division of $636 million in 2012 on increased spending on oil
platforms, power plants and highway construction.
In a new foray into the oil business, the company announced
it will acquire two offshore oil platforms - built in the United
Arab Emirates - to drill at depths of up to 30,000 feet under
the ocean floor.
The first platform is expected to start operations in June
this year and the second in October, with an expected investment
of $355 million, Grupo Mexico said.
The company this year will also invest $231 million in the
transportation division for the maintenance, improvement, and
expansion of the railroad system in Mexico.