UPDATE 2-Mexico 2010 copper output seen at 250,000 tonnes

* Mexico 2010 copper output seen up 5 pct vs 2009

* Forecast assumes no production at Cananea

* Cananea dispute holds up Grupo Mexico’s El Arco project

* Mining companies to invest $13.1 bln in Mexico 2010-12
(Adds mining chamber’s 2010-12 investment forecast)

MEXICO CITY, April 7 (BestGrowthStock) – Mexican copper output will
rise about 5 percent in 2010 from last year to 250,000 tonnes,
an executive at copper miner Grupo Mexico (GMEXICOB.MX: ) said on
Wednesday.

“Mexican output will be 250,000 tonnes, not including
anything from Cananea,” Xavier Garcia de Quevedo, the head of
company’s mining division, told reporters.

Mexico produced 238,400 tonnes of copper in 2009 according
to the local mining chamber.

Grupo Mexico’s massive Cananea mine has been shut for more
than two years due to a labor dispute. Although Grupo Mexico
has won a legal ruling against the strike the union has refused
to end their occupation of the facility.

The impasse at Cananea is holding up $5 billion in
investments planned by Grupo Mexico there and at its El Arco
project in Baja California, Garcia de Quevedo said.

“Once (the Cananea situation) is resolved, we’ll have the
basis to start up the El Arco project as well,” he said.

Garcia de Quevedo did not give a forecast for when Cananea
might reopen.

The $2 billion El Arco project was expected to start
production in 2012 with a capacity to produce 140,000 tonnes of
copper and another 50,000 tonnes of copper anode.

The project would rely in part on some of the industrial
facilities at Cananea to process its output.

The strike is also holding up a $3 billion expansion
project at Cananea that would lift output there from 190,000
tonnes a year to 460,000 tonnes when complete.

The two projects, if built, would turn Mexico into the
world’s second largest copper producer, Garcia de Quevedo
said.

Separately, Manuel Luevanos, the head of the local mining
chamber, said in a speech he expected mining investment to
total $13.1 billion in Mexico between 2010 and 2012. It was
unclear if that figure included the $5 billion in investment on
hold at El Arco and Cananea.

Luevanos said the mining industry would continue to invest
in Mexico despite a difficult labor environment that he said
had cost companies $3.2 billion in losses since 2006.

Investment Research

(Reporting by Mica Rosenberg; Writing by Robert Campbell;
Editing by Lisa Shumaker)

UPDATE 2-Mexico 2010 copper output seen at 250,000 tonnes