Mining Company Grupo Mexico Rescinds Threat to Shut Down Operations at Sonora & Coahuila Mining Complexes

SourceMex Economic News & Analysis on Mexico, June 12, 2002 | Go to article overview
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Mining Company Grupo Mexico Rescinds Threat to Shut Down Operations at Sonora & Coahuila Mining Complexes


The mining company Grupo Mexico has rescinded its threat to shut down operations at its giant mining complexes in Cananea, Sonora state, and Nueva Rosarita, Coahuila state, after reaching a wage settlement with workers at Cananea. The settlement ended a six-day strike organized by the Sindicato de Trabajadores Mineros, Metalurgicos y Similares de la Republica Mexicana (STMMSRM) at the two facilities.

Grupo Mexico threatened to suspend operations at Cananea and Nueva Rosarita for as long as two years after STMMSRM members accused the company of violating a collective- bargaining contract. The contract negotiations involved only workers at Cananea, but the strike took place at both plants.

Union members refused to accept the company's offer of a 5.75% increase in wages and benefits, the amount accepted at other facilities earlier this year. Union workers instead were seeking an increase of 16.3% in wages and benefits, including the restoration of a productivity bond that was withdrawn two years ago.

Management countered that this request was unrealistic given the depressed conditions of the global metals markets. "[Such an increase] would reduce the viability of those operations given low metals prices," the company said in a statement. Grupo Mexico is Mexico's largest metals exporter, producing copper, zinc, silver, gold, lead, and molybdenum.

Company, union settle six-day strike

The two sides finally settled on a 10.5% increase, which includes wages, benefits, and back pay. "This was a favorable settlement for workers, even if we did not receive everything we sought," said local union leader Guadalupe Coronado Anaya.

Furthermore, management and labor representatives agreed to create a commission to look into charges that the company has violated worker rights at the Cananea and Nueva Rosarita plants. The commission will include representatives of the STMMSRM, Grupo Mexico, the federal Secretaria del Trabajo y Prevision Social (STPS), and labor experts from the states of Sonora and Coahuila.

The strike settlement ends one headache for Grupo Mexico, which has been facing extreme financial difficulties because of the weak metals market, especially copper.

The conglomerate had attempted to improve its bottom line by proposing to merge rail operation Ferrocarriles de Mexico (FERROMEX) with Grupo Carso's Ferrocarriles del Sureste (FERROSUR). But the merger, which would have boosted profitability for both companies, was rejected by the government's anti-monopoly agency (Comision Federal de Competencia, CFC) in May (see SourceMex, 2002-05-22).

Grupo Mexico's threats to shut down the two mining facilities were viewed as a negotiating ploy to force union workers to accept Grupo Mexico's offer.

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