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MEXICO CITY (Reuters) – He is Mexico’s second-richest man and his mining company has had a run of bad publicity with a deadly coal mine blast and a long strike, yet German Larrea has managed to stay out of the news, cementing his
reputation as the country’s most secretive billionaire.
Precious little is known about Larrea, whose company Grupo Mexico is aiming to regain its ranking among the world’s top three copper producers. Most Mexicans have never heard of him, and even photographs of him are rare.
The national miners’ union blames Larrea for a three-year strike at Mexico’s largest copper mine Cananea and for a 2006 explosion at a company coal mine that killed 65 workers. But Larrea has not appeared in person to respond to the union claims, and he rarely appears in public at all.
Larrea has in recent months won two key legal battles that should benefit Grupo Mexico, including a court order allowing it to fire the striking workers at Cananea and resume production.
Larrea sits on an estimated fortune of $10.5 billion and only telecoms tycoon Carlos Slim, the world’s richest man, has more money than him in Mexico, according to respected Mexican financial website Sentido Comun.
Forbes in an earlier calculation pegged him as No. 3 after Slim and Ricardo Salinas Pliego, who runs a TV empire.
While Slim, Salinas Pliego and Mexico’s other top business leaders regularly appear at events and galas, Larrea seems to use his fortune and influence to stay out of the limelight.
“They like to go out a lot to places, dinners and to the presidential palace, but that is not the case with him,” a Grupo Mexico executive told Reuters.
Industry sources and former employees decline to talk to the media about Larrea and he has never given an interview or a press conference. One Mexico City-based analyst said there appeared to be a tacit pact among Larrea’s closest circle to keep details about his personal life a total secret.
“He keeps a low profile. You don’t see his pictures in company publications. He doesn’t want to be in public,” a Peru-based employee of Southern Copper, Grupo Mexico’s mining arm, said of Larrea, describing him as a “workaholic” who “makes fast, intelligent decisions.”
SON OF THE KING
Larrea, who is believed to be 57, inherited Grupo Mexico from his father Jorge, dubbed the “King of Copper” for his shrewd purchases from the government of two of Mexico’s largest copper mines. German took the helm before the elder Larrea died in 1999 at 87 and is now chairman of the board with his brother Genaro as No. 2.
Many of Mexico’s biggest companies follow a similar family-controlled pattern of management and some, like Slim’s fixed-line telephone business, have benefited from the privatization of government firms.
German Larrea helped grow Grupo Mexico with mines in Peru and the United States as well as railroads and a construction business. His success is illustrated by a Reuters survey of 10 analysts who track Grupo Mexico’s stock that shows eight rate it as “buy.”
Analysts expect two recent court decision in Larrea’s favour to raise Grupo Mexico’s annual copper production to more than 1 million tonnes.
First, Grupo Mexico won a court ruling in December that restored its control of U.S. miner Asarco, after paying more than $2 billion to pull the former subsidiary out of bankruptcy after years of litigation.
Larrea had tried to avoid an appearance in a Texas court in 2008 with a taped deposition but was forced to testify in the end in a rare public appearance.
Grupo Mexico fought with Asarco shareholders who claimed Larrea took over the firm and then stripped it of a key asset, its Southern Peru arm, pushing Asarco toward insolvency.
In his testimony, in heavily accented English, Larrea often sounded distrustful of advice he received from lawyers to put Asarco into bankruptcy.
“In my opinion (the lawyers) confuse the mandate. And instead of advising us, they start thinking that we were going to a Chapter 11, and that was never our intention,” Larrea told the court, which several times had to ask him to speak louder.
UNION BATTLE
In Mexico, the company has been locked in an epic struggle with the miners’ union at Cananea since July 2007 when more than 1,000 workers walked off the job. The strike dragged on as union and company lawyers fought over its legality in court, but Grupo Mexico finally won a Supreme Court ruling earlier this year which allowed it to fire the miners.
With the backing of federal police, the company retook control of the mine near the border with Arizona in June but has had to bus in contract workers through a special entrance to avoid clashes with angry union members. The union is appealing the takeover order.
The strike has pitted Grupo Mexico against union leader Napoleon Gomez, who like Larrea inherited his post from his father and has won pay rises and profit-sharing deals. He says his own father had a more amicable relationship with Larrea’s father.
“There were hard moments but never to this degree,” Gomez said in a phone interview from Canada where he has exiled himself to avoid arrest on embezzlement charges in Mexico.
“Jorge Larrea … was a tough negotiator but he had a great advantage over German Larrea. He was a man who kept his word,” said Gomez, who is struggling with divisions inside the union. He says the charges against him are fabricated but the government
does not recognize him as the union’s legitimate leader.
Larrea’s decision to stay clear of the public view does come at a cost when attacks against his character go unanswered, like the union-made banner often hung outside the company’s corporate offices on a busy road in Mexico City.
It bears a rare, fuzzy photo of Larrea with the word ‘murderer’ written below in red letters, referring to the 65 deaths at the company’s Pasta de Conchos coal mine in northern Mexico in 2006. Most of the miners’ bodies, hundreds of feet down in a mine shaft, have never been recovered.
(Additional reporting by Teresa Cespedes in Lima; Editing by Kieran Murray and Lisa Shumaker)
(For more business news on Reuters India click in.reuters.com)
