2009-11-20 19:00:03 -

Fitch Ratings has affirmed the Issuer Default Ratings (IDRs) and outstanding debt ratings of Grupo Mexico and its subsidiaries as follows.

Grupo Mexico


--Foreign currency IDR at 'BBB-';

--Local currency IDR at 'BBB-'.

Americas Mining Corporation (AMC)


--Foreign currency IDR at 'BBB-'.

Southern Copper Corporation (SCC)


--Foreign currency IDR at 'BBB';

--Local currency IDR at 'BBB'.

--Unsecured debt issuances at 'BBB'.

The Rating Outlook for all three entities is Stable.

The rating affirmations follow the approval of AMC's reorganization plan for Asarco by the U.S. District Court in Texas on Nov. 13. This

plan will result in the payment in full of Asarco's creditors and will enable it to emerge from bankruptcy. AMC's plan calls for it to make a cash payment of $2.2 billion that will be distributed to creditors of Asarco.

AMC, along with Grupo Mexico, will also guarantee a $280 million promissory note that will be issued by Asarco for the benefit of an asbestos trust. AMC will also provide a $200 million working capital loan to Asarco.

To fund the Asarco reorganization plan, AMC is expected to raise up to US$1.5 billion of debt guaranteed by Grupo Mexico. It will also be collateralized by all of AMC's shares in Asarco, as well as a portion of its shares in SCC. Debt service for this loan would be met with funds received via dividends from SCC and Asarco. Upon closing of the AMC plan, Asarco would have US$280 million of debt. Asarco is expected to generate about US$250 million of EBITDA during 2009, representing a decline from approximately US$490 million during 2008. Additional support for AMC's debt may be provided by Grupo Mexico, which is expected to have about US$400 million of cash at the holding company level following the closing of AMC's reorganization plan for Asarco. In addition to receiving dividends from AMC, Grupo Mexico receives dividends from its infrastructure and transportation subsidiaries.

As a result of the aforementioned events, Grupo Mexico's consolidated debt is expected to climb to US$3.5 billion and its cash position should decline to approximately US$1 billion. On a proforma basis, as if Asarco was consolidated as of Jan. 1, 2009, its 2009 EBITDA should be about US$2 billion. This represents a proforma increase in Grupo Mexico's total debt/EBITDA ratio to 1.8 times (x) from 1.0x and an increase its total net debt/EBITDA to 1.3x from a net cash positive position.

The U.S. District Court established a 30-day appeal period that will expire on Dec. 14. Fitch believes the probability is low for a successful challenge to this ruling. Should a successful challenge occur, however, Fitch would likely affirm the ratings at their current levels since the credit impact upon AMC and Grupo Mexico would be minimal given their current strength within the existing rating category.

The investment grade ratings of Grupo Mexico, AMC and SCC reflect their strong financial profile and the company's leading position in the copper industry. Grupo Mexico is the holding company for AMC, which in turn owns 80% of SCC. AMC will reintegrate Asarco following the execution of its plan to remove Asarco from bankruptcy. This plan will also result in the discharge of the fraudulent conveyance ruling against the company. Grupo Mexico's rating also positively factors into consideration its leading position in the railroad industry in Mexico through its subsidiaries Ferromex and Ferrosur.

For the last 12 months (LTM) ended Sept. 30, 2009, Grupo Mexico generated US$1.4 billion of EBITDA, down from US$2.9 billion during 2008. The decrease in Group Mexico's consolidated EBITDA was primarily due to lower copper prices and decreased volumes. Grupo Mexico's revenues and cash flow also declined due to decreased demand by the customers of the company's railroads. On a consolidated basis, Grupo Mexico had US$1.7 billion of debt and US$1.7 billion of cash as of Sept.

30, 2009. Grupo Mexico had US$1.1 billion of cash at the holding company level and no debt as of this date. Fitch expects Grupo Mexico's consolidated EBITDA to climb to approximately US$1.7 billion for 2009 due to strengthening copper prices in the fourth quarter.

SCC's 'BBB' rating reflects its position as Grupo Mexico's main operating subsidiary and the priority position of its creditors. For the LTM ended Sept. 30, 2009, SCC generated US$1.1 billion of EBITDA on US$3 billion of revenues. These figures compare with an EBITDA of US$2.5 billion in 2008 and revenues of US$4.9 billion. Fitch expects SCC's financial performance to improve for the rest of 2009 due to the recovery in copper prices, which gradually rose from their 2009 lows of US$1.40 per pound in January to around US$3 per pound in November 2009.

SCC had US$1.3 billion of total debt and US$413 million of cash as of Sept. 30, 2009. SCC's cash cost of operations, including by-product credits, is estimated to be about US$0.50 per pound of copper produced, giving it one of the most competitive positions in the copper industry.
SCC was the fifth largest producer of copper during 2008. SCC's mine lives are amongst the longest in the world due to its extensive copper reserves.

AMC's 'BBB-' ratings reflect the company's position as an intermediate holding company of Grupo Mexico's mining operations with no operating assets, but rather the ability to receive dividends from SCC due to its direct 80% ownership stake in that company. As of Sept. 30, 2009, SCC had US$30 million of debt. SCC met debt service for these obligations with the US$224 million of dividends it received from SCC during the first three quarters of 2009.

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Fitch RatingsJay Djemal, +1-312-368-3134 (Chicago)Joe
Bormann, CFA, +1-312-368-3349 (Chicago)Alberto Moreno,
+52-82-8335-7179 (Monterrey)Brian Bertsch, +1-212-908-0549 (Media
Relations, New York) brian.bertsch@fitchratings.com : mailto:brian.bertsch@fitchratings.com