Reuters reported that Mexican copper miner and railroad operator Grupo Mexico scrapped plans to merge its two mining units amid better than expected results at its US Asarco subsidiary.

Grupo Mexico which controls mines in Mexico, Peru and the southwestern United States proposed last year to fuse its US Asarco unit with Peru's Southern Copper. But the deal was called off after recent discussions with an independent committee formed to evaluate the merger.

Mr Daniel Muniz CFO of Grupo Mexico said that "We will explore other strategic alternatives to create value through both subsidiaries."

Grupo Mexico said that Americas Mining the holding company of the mining division that includes Southern Copper and Asarco could list separate securities in capital markets. It did not give details about what kinds of securities AMC could offer, noting this is one of the strategic alternatives AMC is considering.

Banamex said that floating AMC shares would allow Grupo Mexico to raise capital. At the current valuation, Grupo Mexico would raise between $5 billion and USD 6 billion with the sale of 20% of AMC. This could finance expansion projects, or even small mergers and acquisitions.

Mr Muniz said that Asarco's results were promising and that the mines in Arizona would be able to increase copper output to 280,000 tonnes by 2016. Grupo Mexico pulled Asarco from bankruptcy in 2009 and has been ramping up its activity since then. Grupo Mexico has a capital expenditure plan for Asarco of around USD 400 million between now and 2016.

(Sourced from Reuters)