UPDATE 2-Cananea copper output 150,000 T in 2011-Grupo Mexico

* Cananea running near 100 pct next year after long strike

* Copper production hedged in fourth-quarter, 2011

* Plans to more than double Cananea output in 5 yrs
(Updates with La Caridad smelter, paragraphs 8-10)

MEXICO CITY, Oct 29 (BestGrowthStock) – Miner Grupo Mexico said on
Friday its giant Cananea mine is slowly reopening after a
three-year long strike and is on track to reach near full
capacity in 2011 and more than double output over the next five
years.

The massive copper pit near the U.S.-Mexico border will
produce around 15,000 tonnes of copper in the fourth quarter of
this year and ramp up production to 150,000 tonnes in 2011,
company executives told an investor conference call.

Grupo Mexico (GMEXICOB.MX: ) has already sold 5,000 tonnes of
copper this year from the mine, which was reopened in June
following a prolonged labor stoppage.

The company retook control of the mine with the backing of
federal police after a court ruled against the union.

The union rejects the ruling and periodic clashes have
broken out near the mine between union members and contract
workers repairing the mine.

“That mine that has 15 percent of our reserves, it is a
great deposit. We believe that it could be up and running 100
percent next year,” Raul Jacob, head of investor relations at
mining unit Southern Copper (SCCO.N: ) told the call.

He said the five year investment plan is to increase the
mine’s 180,000-tonne capacity to 450,000 tonnes.

A separate labor dispute with the national mining union
disrupted production at the company’s La Caridad copper smelter
last month, forcing Grupo Mexico to declare force majeure to
some clients.

“Operations are back to normal,” Chief Executive Officer
Daniel Muniz said.

The fight in La Caridad began when members of a more
company-friendly labor organization decided to join the
national miners union that led the strike at Cananea and were
fired. Union supporters blocked smelter workers from entering.

COPPER HEDGING

In addition to mines in Peru and Mexico, Grupo Mexico
recently won back control of Arizona-based Asarco, pulling the
U.S. company from bankruptcy last year after beating out bids
from rival companies.

Muniz said Grupo Mexico hedged nearly all of Asarco’s
50,000 tonnes of copper production this year and 83 percent of
2011 production.

For the fourth-quarter, Southern Copper hedged 58 percent
of its production through swaps at an average price of $3.67
per pound and 11 percent of output in 2011 through swaps at an
average price of $3.73 per pound, the company said in its
third-quarter earnings report released on Thursday.

“The reason we’ve hedged more in Asarco is because Asarco
has a more expensive cost base,” Muniz said. “We haven’t seen
in a long time the copper prices we saw this past month so we
really took advantage of that and locked in some of the
profits.”
(Reporting by Mica Rosenberg; Editing by David Gregorio)

UPDATE 2-Cananea copper output 150,000 T in 2011-Grupo Mexico