Union Reports Lack of Progress in Talks with Grupo Mexico Affiliate

Contact: Manny Armenta (USW) – (520)-465-3617

PITTSBURGH – The United Steelworkers (USW) today met with local representatives to report on the lack of progress in labor negotiations between the union and Asarco, Inc., an affiliate of Mexico City based conglomerate Grupo Mexico and corporate parent of ASARCO. The meetings took place in Hayden and Kearny, Arizona with the presidents of the local unions representing over 1,200 employees at ASARCO’s Arizona facilities.

Asarco, Inc. is attempting to regain control of ASARCO when it emerges from an almost four-year long bankruptcy, which began in August 2005.

The USW has already reached a labor agreement with Sterlite USA in connection with a plan of reorganization supported by ASARCO, which provides for the long-term security of both the business and the employees and retirees of the company. Under the current labor agreement with ASARCO a new labor agreement with the USW is a necessary precondition to a plan of reorganization.

In the meetings, the USW and local leadership agreed to begin preparing for the possibility of a labor dispute if the parent company somehow regains control of ASARCO without having bargained a satisfactory new collective bargaining agreement with the USW.

“To this point, Asarco Inc. has failed to address our union’s concerns about the long term viability of the business and the security of the jobs and benefits of ASARCO employees and retirees,” said District 12 Director Robert LaVenture, who chairs the union’s negotiations with Asarco, Inc.

The USW had a contentious relationship with Grupo Mexico from 1999 through 2005, when Grupo Mexico dominated ASARCO’s management. The company unilaterally modified retiree benefits during this period and, in July 2005, provoked an unfair labor practice strike which was only resolved after four months and the involvement of the bankruptcy court and the company’s creditors.

In addition, a U.S. District Court has assessed billions of dollars in damages against a Grupo Mexico affiliate in finding that the affiliate engaged in a fraudulent transfer of stock of the Southern Peru Copper Corporation from ASARCO to the Grupo Mexico affiliate in 2003, aided and abetted ASARCO’s directors in a breach of their fiduciary duty to ASARCO and ASARCO’s creditors while controlling ASARCO during a period that ASARCO survived hand to mouth.

Since early in the bankruptcy case, ASARCO has been led by a new management appointed by an independent board of directors. In early 2007, the USW and ASARCO negotiated a groundbreaking new labor agreement that improved employee wages and benefits, secured retiree insurance programs and allowed ASARCO the flexibility needed to operate competitively. Asarco, Inc. has unsuccessfully opposed the approval of that agreement in the courts.

Further negotiations between the Union and Asarco, Inc. are scheduled later this week, and the union intends to continue to pursue its bargaining goals of protecting the gains won in 2007 and obtaining further protections to preserve the integrity of the business in the context of Grupo Mexico’s history.

In addition to its own members, the USW negotiates on behalf of several other unions that represent employees at ASARCO, including affiliates of the International Brotherhood of Electrical Workers, the Machinists, the Boilermakers, Teamsters, Operating Engineers, Millwrights and Plumbing and Pipefitting unions.

The USW represents about 1.2 million active and retired members in the United States and Canada in a wide variety of industries, ranging from mining, paper, steel, tire and rubber and other manufacturing environments to the public sector, service and health care industries.

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