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To: stevenallen who wrote (18102)	8/26/2004 7:28:32 PM
From: russwinter	Respond to of 110194

That would be about 35,000 MT of Cu lost a month, critical at this stage. Markets News advertisement UPDATE 2-Southern Peru miners threaten Aug 31 strike Thu Aug 26, 2004 04:54 PM ET (By Robin Emmott LIMA, Peru, Aug 26 (Reuters) - Workers at Southern Peru Copper Corp. (SPC.LM: Quote, Profile, Research) (PCU.N: Quote, Profile, Research) will strike from Aug. 31 unless the miner hikes their pay and rejects a merger proposed with its parent company's mining unit, a union leader said on Thursday. A walk-out by some 1,500 workers at Peru's Toquepala and Cuajone copper mines would halt copper production, as the miners make up 85 percent of operating staff, Elmer Gallegos, secretary general of the Cuajone mine workers told Reuters. The two mines are located in Peru's southern Andes. Peru is the world's No. 5 copper producer. "We plan to strike from Tuesday, August 31. We are asking for a pay rise ... We're against the merger with Minera Mexico," Gallegos said. Miners want an 8 percent pay rise, above Peru's annualized inflation rate of 4.61 percent, to take their pay to 81 soles ($24) a day, Gallegos said. Negotiations over pay with Southern Peru had not yet started, he added. Gallegos said workers were against plans to merge Southern Peru with a subsidiary owned by parent company Grupo Mexico (GMEXICOB.MX: Quote, Profile, Research) , Minera Mexico. Southern Peru declined to comment directly on workers demands. But a company spokesman said: "We will do everything possible to avoid a strike." Mexico City-based Grupo Mexico, the world's No. 3 copper producer, has proposed a merger of its mining assets with Southern Peru that it says would create a regional mining force and allow it to modernize equipment and operations. But Gallegos said Minera Mexico's Cananea and La Caridad mines had total debts of $800 million, which made it a losing deal for Southern Peru workers. "Southern Peru is a profitable company. Why should we pay for their debts with our profits?" Gallegos said. Grupo Mexico owns 54 percent of Southern Peru and has a 99 percent stake in Minera Mexico, which manages all of Grupo Mexico's domestic mining operations. The company spokesman for Southern Peru said the Ilo smelter on Peru's southern coast was not affected. Southern Peru expects output of 850 million pounds of copper this year, up from 800 million in 2003, based on higher ore grades at Toquepala and Cuajone. The miner reported a second-quarter net profit of $121 million -- more than five times the $22 million it reported a year ago -- lifted by high copper prices. London copper prices averaged $1.27 a pound in the second quarter, compared with 74 cents a pound in the same period last year, the company said.