Miner interested in Riviera Maya Tulum Airport & Pacific PortCompany started as construction firm, moved into mining * New investments at largest Mexico mine stalled by strike (Updates with railroad ruling). By Mica Rosenberg
MEXICO CITY, May 25 (Reuters) – Grupo Mexico is pushing to expand its construction business by eyeing a bid for a new international airport near Cancun and a major Pacific port, reaching beyond its core mining and railroad operations.
Billions of dollars of investment at Cananea, Grupo Mexico‘s largest copper mine in Mexico, have been put on hold by a nearly 3-year long strike.
The company (GMEXICOB.MX), which runs copper mines in Mexico, Peru and the United States, is choosing to funnel new investments to other mining projects while planning to grow its construction arm, company executives told Reuters recently.
“We are interested in expanding our infrastructure and construction business in areas of ports, airports and all the types of infrastructure that is linked to our principal businesses: the railroad and the mines,” Juan Rebolledo, vice president of international relations, said in an interview.
In a big departure from previous projects, Grupo Mexico is considering involvement in the construction and operation of a new international airport south of the tourist hot spot of Cancun, on Mexico’s Caribbean ocean.
“Yes, of course (we’re interested), but there is nothing defined yet,” Rebolledo said of the airport project.
The government in mid-November will start to accept bids for the “Riviera Maya” airport, which will be located in Tulum, popular for white sand beaches and Mayan ruins.
“We will not necessarily do it alone, we will probably do it with others,” he said without naming partners.
Airport operators Grupo Aeroportuario del Sureste (ASURB.MX), Grupo Aeroportuario del Centro Norte (OMAB.MX) and Grupo Aeroportuario del Pacifico (GAPB.MX) (PAC.N) have expressed interest in the project and the winner could be announced in December, Deputy Transport Minister Humberto Trevino told local media this month.
Grupo Mexico has experience building dams, hydro-electric plants, railroads, tunnels and mining installations through four fully-owned subsidiaries, although the division is still small compared to the mining and transportation arms.
“The capital expenditures between Grupo Mexico‘s divisions are not comparable. The mining division alone will spend $2.8 billion in the coming years, while the airport project on the Riviera Maya is estimated at less than $250 million,” Pablo Peregrina, an analyst at BBVA Bancomer, said.
Peregrina said Grupo Mexico was unlikely to win the Riviera Maya bid as other groups with experience will present aggressive proposals to build and operate the airport.
But the airport is not the company’s only major target. Grupo Mexico is also looking at a large container port project, said Jorge Pulido, head of Grupo Mexico’s investor relations.
The port, planned for Punta Colonet on the Baja California peninsula near the U.S. border, would handle up to 6 million containers per year and is considered one of President Felipe Calderon’s top infrastructure proposals, but it has been long postponed as the government decides how to launch the tender.
Pulido said Grupo Mexico is currently building just one public-works project: two tunnels to help prevent flooding along the Grijalva River in southeastern Mexico for the Federal Electricity Commision.
The tunnels, which cost $569.4 million pesos ($43.75 million), were set to be completed in July of this year.
Grupo Mexico started out as a construction company in 1942 and began focusing on specialized projects for the mining industry around 1960 before buying outright the mines where it was working.
The company also operates railroads in Mexico and recently won a court ruling that could help it merge its two rail operators, Ferromex and Ferrosur, into one entity. The transportation division could eventually be spun off and raise funding through an equity placement, BBVA Bancomer said in a research note.
“The possible participation of Grupo Mexico in infrastructure projects we think responds to a need to find other sources of income, rather than replacing the (lost) sales from Cananea,” Peregrina told Reuters.