UPDATE 3-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 comments from Southern Copper CEO)

By Mica Rosenberg

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 the country’s biggest 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, head of the company’s
mining division, told reporters.

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

Grupo Mexico’s massive Cananea mine has been shut for nearly
three years due to a labor dispute.

The company recently won a legal ruling against the strike,
which started in July 2007 over health and safety concerns, but
the union has refused to end the 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.

The $2 billion El Arco project was expected to start
production in 2012 with a capacity to produce 190,000 tonnes of
copper.

Cananea has industrial facilities that process copper mined at
other sites and El Arco would likely send some of its raw material
to the massive complex near the U.S.-Mexico border.

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, Garcia de Quevedo said.

The two projects, if built, would turn Mexico into the world’s
second largest copper producer, he said, but could not give a
forecast for when Cananea might reopen.

“When they turn it over to us,” he said, shrugging his
shoulders. The union says it will not back down, leaving the
project in limbo. [ID:nN18198161]

But Oscar Gonzalez, chief executive of Southern Copper
(SPC.LM: )(PCU.N: ), Grupo Mexico’s listed mining unit based in Peru,
was more upbeat on Wednesday, saying at the Cesco/CRU copper
conference in Chile that Cananea could be up and running before
the end of 2010. [ID:nN07147541]

NEW MINING INVESTMENTS

Despite the labor problems, which have cost the Mexican mining
sector $3.2 billion since 2006, the national mining chamber said
investments in new projects were expected to pick up over the next
two years.

Manuel Luevanos, the head of the chamber, said on Wednesday
mining investment in the country would reach $13.1 billion between
2010 and 2012. It was unclear if that figure included the $5
billion in investments on hold at El Arco and Cananea.

Luevanos said the global financial crisis led to a 22 percent
drop in investments in 2009 compared to 2008, but that the outlook
was not as grim for the future.

The planned investments “show the confidence of our sector in
the country and positive global demand,” Luevanos said at an event
in Mexico City.

Investing

(Reporting by Mica Rosenberg; Writing by Robert Campbell;
Editing by Phil Berlowitz)

UPDATE 3-Mexico 2010 copper output seen at 250,000 tonnes