UPDATE 1-Mexico's Hylsamex suspends mining on high gas prices Reuters Company News - September 21, 2000 20:4

MEXICO CITY, Sept 21 (Reuters) - Mexican steel processor Hylsamex said on Thursday it had suspended its mining activities and some steel production until natural gas prices, up more than 125 percent since Dec. 1999, fall from their high levels.

Hylsamex, a unit of Mexican industrial conglomerate Alfa , said in a news release that the decision would affect 1,250 direct employees of the firm, and 6,000 providers, contractors and others, at a number of iron mines and processing plants throughout the country.

"These measures are painful, but they are necessary due to prevailing energy prices in Mexico," Mateo Quiroga Villarreal, in charge of raw materials for the mining company, said in the statement.

Hylsamex and Alfa shares were among the heaviest losers on Thursday on the Mexican stock exchange, both hitting their lowest price of the year. Hylsamex slid 8.57 percent to 9.6 pesos per share, while Alfa shares dropped 6.94 percent to 20 pesos per share.

The company said the measure would remain in effect until prices returned to "reasonable levels." Natural gas prices in Mexico have gone from $2.00 dollars per million Btu (British thermal units) in December 1999, to $4.50 per million Btu earlier this month.

The company said it would suspend operations in mines in Colima, Jalisco and Michoacan and in a steel plant in Monterrey.

The plants have a capacity of 1.6 million metric tons of steel products, wire rod and reinforcing bar, while the mines supply half of Hylsamex's supply of iron.

The company also said its Puebla plant would operate at less than half of its production capacity, which is 600,000 metric tonnes.

Hylsamex recently told Reuters that natural gas and electric energy costs represent between 17 percent and 19 percent of total expenses.

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-- Martin Thompson (mthom1927@aol.com), September 22, 2000

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Only surprise is that there are not a lot more stories like this one.

-- Uncle Fred (dogboy45@bigfoot.com), September 22, 2000.