Grupo Mexico increases production

The acquisition of Asarco enabled Grupo Mexico to boost its copper output in 1999, whereas zinc and silver production were lower than in the previous year.

Copper production reached 495,723 tonnes, including 44 days of contribution from Asarco’s operations.

Production at Grupo Mexico’s own operations was up 2.4%; this increase would have been greater had it not been for a strike at the Cananea porphyry operation in Sonora state.

Overall cash operating costs totalled US42 per lb.

Zinc production from Grupo Mexico operations dropped 1.6% to 148,649 tonnes for the year, reflecting extended maintenance at the San Luis Potosi refinery. Including Asarco’s contribution, the total reached 152,985 tonnes.

Grupo Mexico’s silver production was down 10.7% to 19.5 million oz., reaching 21.3 million, including Asarco’s contribution.

Gold production fell 38% to 63,950 oz. but climbed to 68,450 oz. following the takeover of Asarco.

Despite lower metal prices, the year’s performance placed Grupo Mexico third in world copper production, behind Chile’s state-owned Corporacion Nacional del Cobre (Codelco) and Phelps Dodge (PD-N).

Grupo Mexico ranked fifth in world zinc production, third in silver production and fifth in molybdenum.

The company earned US$191.8 million in the fourth quarter, compared with US$62.7 million in the corresponding period of 1998.

Grupo Mexico concluded its acquisition of Asarco in mid-November 1999 at a total cost of US$2.52 billion, including assumption of US$1.16 billion in debt. The company reduced its debt through the US$503-million sale of Asarco’s Enthone-OMI specialty chemical unit.

Grupo Mexico expects to achieve cost savings of more than US$150 million annually as a result of the Asarco transaction.

For 2000, the company expects to produce 800,000 tonnes of copper.

Grupo Mexico also operates the largest railroad in Mexico, in a joint venture with Union Pacific, and owns a 54.3% interest in Southern Peru Copper (PCU-N).