July 29, 2008 / 9:16 PM / 10 years ago

CORRECTED - Grupo Mexico faces $1.3 bln in losses from strike

(Corrects headline and first paragraph to show loss at $1.3 billion, not $1.3 million)

MEXICO CITY, July 29 (Reuters) - Mexican miner Grupo Mexico said on Tuesday the year-long strike at its giant Cananea copper pit had cost the company $1.3 billion in lost sales and a 40 percent decrease in Mexico’s overall copper output.

The strike, which began last July 30 over health and safety concerns, has been complicated by a struggle between Grupo Mexico and the head of the mining union, Napoleon Gomez.

Gomez, who is living in Canada to avoid corruption charges, says the company fabricated the claims against him because the union has negotiated wage hikes as metals prices soared.

The long-running strike also has shut down two smaller Grupo Mexico (GMEXICOB.MX) mines, and the company has proposed severance packages to encourage workers to leave their jobs. The union says it has seen no acceptable offer.

“We are not in communication with (the company) or with the labor ministry,” union official Carlos Pavon said. “The strike continues until they resolve the security problems at the mine and pay 100 percent of lost salaries,” Pavon said.

Grupo Mexico estimated that each worker had lost 500,000 pesos ($48,510) in income since the strike began.

“With this strike, the workers lose, the municipality of Cananea loses, the country and of course the company lose,” said Grupo Mexico’s lawyer Salvador Rocha in the statement.

The labor ministry last month refused to recognize the reelection of Gomez as the head of the union because of the charges pending against him.

The union staged a series of temporary walk-outs at other mines to support Gomez and now refuses to recognize the government as a legitimate intermediary in strike negotiations, saying it favors the company, something the government denies.

Grupo Mexico posted second-quarter net profit of $452 million this week, down 14 percent versus the same period a year ago as the strike affected copper output, its primary product. ($1 = 10.307 pesos at end June) (Reporting by Mica Rosenberg; Editing by David Gregorio)

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