[miningmx.com] — MEXICAN miner and railroad operator Grupo Mexico said its profit doubled in the second quarter, boosted by higher metals prices and output from a key mine now up-and-running after a multi-year strike.
The company, which has copper mines in Mexico, Peru and the US Southwest, said on Friday it earned $657m in April through June this year, up from $324m in the same period in 2010.
Sales rose 38.7% to $2.7bn in the quarter as the company mined more copper and sold it at higher prices.
Copper this quarter was trading at levels around 50% above those seen in the second quarter last year, with the benchmark contract hitting a three-month high on Friday of $9,895 per tonne in London.
Despite market volatility, the company said it was still positive on copper prices, which will be bolstered by growing global demand for the metal and tight supplies.
Revenues were helped by the resumption of copper production at the massive Cananea mine in northern Mexico, which reopened last year after a court ruled against the national mining union to end a three-year strike.
Grupo Mexico renamed the historic pit, where labor unrest in the early 1900s helped spark the 1910 Mexican Revolution, “Buenavista del Cobre.”
The plan is to invest $3.7bn in an expansion plan there to more than double capacity to 450,000 tonnes.
“During (the second quarter of 2011) Buenavista reached its full capacity and produced 45,588 tons of copper,” the statement said, which raised the company’s overall mined copper production by 15.3%.
In Peru, the company has invested $128.2m to expand the concentrator at its Toquepala mine and now sees expanded processing there of 60,000 tonnes. The project should be completed by the first quarter of 2013.
Total investment in the South American country will reach $2.6bn to increase capacity to 647,000 tons of copper, the company said.
RAILROADS, AIRPORT BID
In a controversial move, Grupo Mexico in June made a bid for a larger ownership stake in Mexican airport operator Grupo Aeroportuario del Pacifico.
After steadily buying up shares in GAP, Grupo Mexico now has 23.2% and wants to acquire more. But GAP’s internal bylaws prevent any non-controlling shareholder from holding more than 10%.
The offer is mired in court after Grupo Mexico sued to change those bylaws and GAP filed an appeal to halt the offer.
In the company’s other ongoing legal battle, Grupo Mexico claimed a victory for the merger of its two Mexican railroad units, Ferromex and Ferrosur, after a judge threw out a complaint by the national competition commission.
Ferromex acquired 44 new locomotives in the second quarter to boost its hauling capacity, and Ferrosur invested $9 million in the quarter, 70% more than in the same period last year, repairing rail lines damaged by hurricanes and storms.
Grupo Mexico said earlier this year that it may be mulling a spin-off of its transportation unit.
Earlier on Friday, Grupo Mexico reported its second quarter net profit in peso terms at 8.2 billion pesos with revenues of 32.985 billion pesos.
