Grupo Mexico doubts full Cananea output

By Mica Rosenberg and Adriana Barrera

MEXICO CITY (Reuters) - Grupo Mexico's (GMEXICOB.MX: Quote, Profile, Research, Stock Buzz) plans to reach full output at its Cananea copper pit by May could be stifled by new blockades as a strike drags on, Mexico's largest copper miner said on Tuesday.

Over the weekend, unionized workers who have been on strike for eight months blocked the entrance to the giant copper mine to prevent the entrance of contract workers who were slowly ramping up production.

The mine reopened in January after a government labor board ruled the strike illegal and the company projected it would be up to significant copper output by next month.

"To say we will be at 100 percent by May, even without the incident on Saturday, may be pushing it," Daniel Muniz, the company's chief financial officer, told the Latin America Investment Summit in Mexico City.

Production of copper cathode last week at Cananea before the blockade was at 100 percent capacity -- some 150 tonnes a day -- and production of copper in concentrate was up to about 45 percent capacity.

But if the some 1,000 contract workers are prevented from entering the mine and the unionized miners remain on strike, it will be difficult to raise production to pre-strike levels.

In 2005, the last year Cananea was not plagued with labor strife, the mine produced 175,000 tonnes of copper cathode and concentrate, Muniz said.

Cananea's production fell by almost half last year to 99,000 tonnes after workers laid down their tools in July over health and safety concerns.  Continued...