MEXICO: Mexican strikes cripple mines, mills and refineries

Tens of thousands of Mexican miners and metal workers joined a nationwide strike on Wednesday in two separate disputes that crippled output at the country's biggest mines, metals refineries and steel mills.

Grupo Mexico, the world's No. 3 copper producer, said its Cananea and La Caridad copper mines were closed for a second day by a wildcat strike of workers complaining of unsafe conditions.

Union workers also closed world No. 1 refined silver producer Penoles' Fresnillo silver mine in support of embattled union leader Napoleon Gomez -- although the local union later said most workers would likely return on Thursday.

Penoles said its silver, gold, zinc and lead refinery complex in Coahuila state closed on Tuesday night, and workers at most of its other mines and operations were on strike.

Silver prices in New York spiked higher on news that up to 5,000 workers had walked out at Fresnillo, although the market then closed lower.

Silver was quoted around $9.74 an ounce at 0500 GMT on Thursday, after rising to a three-week high of $9.84 the previous day.

Late on Wednesday, local union leader Gustavo Barrios said the union had decided at a meeting that any workers wanting to return to the job could do so, although it maintained its stand in support of Gomez.

"We reached an accord where for those people who want to work, they will be permitted to go back to work," Barrios told Reuters. "We don't know how many personnel will return to work but I think it will be the majority of people."

Three-month London Metal Exchange copper rose $5 a tonne to $4,860/$4,870 a tonne in early Asian trading hours on Thursday, after gaining $57 in the last London session.

Grupo Mexico shares soared 5.92 percent to 28.43 pesos and Penoles was up 2.74 percent to 68.60 pesos.

UNREST

Mexico's mining industry has faced mounting unrest since an explosion at a coal mine in northern Mexico owned by Grupo Mexico killed 65 men last week. Gomez, who called the explosion "industrial homicide," faces a leadership challenge and accuses the government and top mining firms of backing his rival.

Top steel plants in the country were also closed by strike action on Wednesday, including Mittal's 4 million tonnes per year Lazaro Cardenas mill in Michoacan state.

Sicartsa, part of the same complex but owned by Mexico's Villacero, was shut down, as was at least one iron ore mine owned by Luxembourg steel maker Ternium.

Mexico's AHMSA, the country's No. 3 steel maker and a major domestic coal miner, said 12,000 workers stopped work at its coal mines and steel plants in support of Gomez.

La Caridad and Cananea between them produced close to 320,000 tonnes of copper in 2005. Penoles produces an average of 80 million ounces of silver per year, the company said.

Penoles spokesman Luis Rey Delgado said it would use its stockpiles to try to meet customer orders in the short term.

"We have done everything possible to satisfy in the short term the demand from our clients and to guarantee supply of our products," he told Reuters.

Several smaller Grupo Mexico operations were also hit by the stoppages but a copper refinery and smelter at La Caridad was unaffected, Grupo Mexico spokesman Juan Rebolledo said.

The union says the government and mining companies backed attempts to oust Gomez because he is a tough negotiator.

Gomez is in turn accused by Grupo Mexico of misuse of funds. He faces a challenge by another union member, Elias Morales Hernandez, who says he is the legitimate leader.

(Additional reporting by Gabriela Lopez in Monterrey and Catherine Bremer in Mexico City)

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