Grupo Mexico has contract terminated for key government project - local paper

A consortium led by Mexico Compania Constructora, a unit of Grupo Mexico, had planned to build a portion of the railway for 17.8 billion peso ($852.89 million). In an earnings call in May, the CEO of Grupo Mexico, controlled by billionaire German Larrea, said that there was minimal risk to the company after a legal injunction suspended the railway's construction.

Mexico's tourism fund has terminated a high-profile construction contract it awarded last year to a consortium led by a subsidiary of mining and transport firm Grupo Mexico, newspaper Milenio reported on Thursday. The contract had been awarded to build a section of the “Mayan Train,” one of Mexico’s flagship infrastructure projects made up of a 1,470-km (910-mile) rail line designed to promote development on the Yucatan Peninsula.

According to Milenio, the contract has now been diverted to Mexico's military and Portuguese construction firm Mota Engil and Mexican builder ICA. Construction of the multibillion-dollar project, a key priority for President Andres Lopez Obrador, was indefinitely suspended in May after running into legal obstacles .

Reuters was unable to verify the termination of the contract. Neither Grupo Mexico, one of the world’s largest copper producers and a major Mexican rail operator, nor Mexico's tourism fund could immediately be reached for a request for a comment. Grupo Mexico shares were down 4.7% in late morning trading, and were the biggest decliners on the Mexican benchmark stock index, although traders said the decline was linked to the impact of declining metals prices on its mining operations.

Shares in its transport unit, GMexico Transportes, were down 1.1%. A consortium led by Mexico Compania Constructora, a unit of Grupo Mexico, had planned to build a portion of the railway for 17.8 billion peso ($852.89 million).

In an earnings call in May, the CEO of Grupo Mexico, controlled by billionaire German Larrea, said that there was minimal risk to the company after a legal injunction suspended the railway's construction. "Regarding the Maya train, we are suspended currently... Nevertheless, the risk profile for us is nothing. Basically, we don't see any risk on our side. We're basically executing the orders of our clients regarding this project," said CEO Ricardo Arce. ($1 = 20.8702 Mexican pesos)