Grupo Mexico eyes $5 bln Baja port project

MEXICO CITY (Reuters) - Industrial Grupo Mexico said on Tuesday it was eager to win a piece of a $5 billion project to build the Punta Colonet port on Mexico's Pacific coast.

The planned mega-project on the Baja California Peninsula is meant to handle part of the surge of goods bound to U.S. consumers from Asia. It will be an alternative to Long Beach and Los Angeles, whose ports are at capacity.

"The big promise is Punta Colonet," Grupo Mexico Vice President Juan Rebolledo told the Reuters Latin America Investment Summit. "It will undoubtedly be the most significant infrastructure project in the past 15 or 20 years."

Mexican President Felipe Calderon has launched an ambitious program to invest billions of dollars to build and improve highways, airports and ports. Experts say the country needs better infrastructure to compete internationally.

Mexico's government has said it will launch tenders to build Punta Colonet, meant to handle 5 million containers per year, in the second half of 2008.

Grupo Mexico (GMEXICOB.MX), a major copper miner that also owns a building firm and two of the country's three main railroads, said it invested nearly $300 million last year in new trains and to improve lines and bridges.

Rebolledo said investments in its railroad business would continue this year with an eye to bringing Mexico's industry up to international standards.

"We have been buying a serious quantity of locomotives. This is practically a renewal of all of the fleet," he said.

Railroads have less than a 20 percent share of Mexico's freight industry, compared with more than 40 percent in Canada and the United States. Grupo Mexico's Ferromex and Ferrosur operators make up more than half of the country's railroad market.

A long-running rift between Grupo Mexico and Kansas City Southern (KSU.N), which operates the other of Mexico's three main railroad networks, has kept the industry expensive and often slow and inefficient, clients say.

Much of their conflict has to do with what they charge each other to use each others' tracks. Rebolledo told Reuters negotiations have advanced but that a final agreement is nowhere near.

Grupo Mexico bought Ferrosur in 2005 in a deal worth $307 million. Since then, Mexico's competition watchdog has told Grupo Mexico it cannot merge the two railroads and must operate them separately. Grupo Mexico is fighting the commission's ruling.

(For summit blog: summitnotebook.reuters.com/)

(Editing by Braden Reddall)