March 4, 2020 / 12:12 AM / a month ago

UPDATE 1-Public will decide whether Constellation brewery opens in Mexico, president says

(Recasts first paragraph, adds quote, context)

MEXICO CITY, March 3 (Reuters) - Mexico's president said on Tuesday his government would ask the public whether to let U.S. company Constellation Brands Inc open a massive brewery in northern Mexico, brushing aside the suggestion that the American government might have reservations.

The brewery in the border city of Mexicali worth more than $1 billion has been a bone of contention with local protest groups, which argue it will cause water shortages in one of Mexico's driest regions. Constellation produces Corona and Modelo beers.

Speaking at a regular government news conference, Lopez Obrador said a public "consultation" should be held, even though U.S. officials were opposed to the idea.

"We were sent messages, even from the U.S. Embassy... that if the consultation happens, it'll end badly for the country," he said.

The U.S. embassy in Mexico did not immediately respond to a request for comment.

Lopez Obrador said the environment ministry had already approved moving forward with a consultation. He did not go into detail about how it would be organized.

"People say: 'it will set a bad precedent if there's a consultation, because it will impact investment.' No, the bad precedent was already set when, without taking people into account, they gave out the permits," he said.

In a statement, Constellation said the brewery would not affect local water supply, and that the plant had all the requisite permits. The company appealed for the rule of law to be respected to give citizens and investors certainty.

Separately, the company said in a letter dated March 2 and published by Mexican newspaper Reforma that it would consider other locations if Mexico became problematic.

"The company no longer has the time to embark on a public consultation in which its future in Mexico is still uncertain," said the letter, signed by Daniel Baima, the president of Constellation Brands in Mexico.

Constellation confirmed the letter was authentic.

Constellation unveiled the project in January 2016 with a price tag of $1.5 billion, saying it would take four to five years to build.

Lopez Obrador, a leftist who took office in December 2018, has slammed the previous administration for approving the project, one of the biggest corporate investments in Mexico of recent years, without the explicit say-so of local residents.

Reporting by Daina Beth Solomon and Abraham Gonzalez; Editing by Lisa Shumaker

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