RPT-UPDATE 2-Grupo Mexico Q1 net drops 96 percent to $19 mln

(Repeats to fix garble in paragraph 8)

* Q1 earnings fall 96 percent

* GMexico estimates damages at Cananea mine $50-$60 mln

* Asbestos creditors support GMexico's bid for Asarco (Adds details about Asarco, Cananea)

MEXICO CITY, April 28 (Reuters) - Miner Grupo Mexico (GMEXICOB.MX), hit by a nearly two-year-long strike at its largest copper mine, reported a 96 percent fall in its first-quarter net earnings on Tuesday.

The company, which operates in dollars, said it was negatively affected by the devaluation of the Mexican peso because of the financial crisis.

Grupo Mexico, which has copper mines in Mexico and South America and railroads in Mexico, said it earned $19 million in the first quarter compared with $453 million in the first quarter of 2008.

Because of a drop in copper prices and slumping demand from the global financial crisis, Grupo Mexico said it would slash investment in 2009 by 68 percent to $428 million.

The company's consolidated sales in the first quarter were $824 million, down nearly 53 percent from the year ago due to a fall in metals prices.

Earnings before interest, tax, depreciation and amortization (EBITDA) were $277 million compared with $1.02 billion in the same quarter last year.

The company, whose largest copper pit Cananea has been shut since July 2007 because of an ongoing strike, said its net debt was $286 million.

A government labor board ruled the company could fire workers at the mine because of damages to machinery. Grupo Mexico estimates the repairs will cost between $50 and $60 million. But the union said it will appeal the decision and fight to continue the strike.

Grupo Mexico is battling in U.S. courts to regain control of its bankrupt subsidiary Asarco, which is buried under massive asbestos and environmental claims.

The Mexican miner said it had reached an agreement with the asbestos creditors to support Grupo Mexico's reorganization plan over a rival bid by India's Sterlite Industries (STRL.BO) for $1.7 billion.

Sterlite's offer has been accepted by all creditors with the exception of the asbestos committee, Grupo Mexico said.

A decision in the case before a Texas court has been delayed until May 15.

Grupo Mexico shares were down 2.31 percent on Tuesday closing at 10.59 pesos per share. (Reporting by Mica Rosenberg; editing by Carol Bishopric)