April 20 (Bloomberg) -- Mexican police shot dead two workers at a steel plant operated by Villacero SA, Mexico's biggest producer of steel bars and wire rod, during an attempt to break a three-week-old picket line, the union said.

About 600 police this morning shot tear gas and opened fire on workers at the company's steel plant in the southern state of Michoacan, killing two and wounding dozens more, the Mexican Mining Federation said in an e-mailed statement. The workers' families burned buses and blocked roads in response, the union said.

Workers went on strike at the plant April 2 to protest the company's support of a government move to remove Napoleon Gomez as leader of the union. Secretary of Public Security spokesman Alberto Narvaez and Villacero spokesman Israel Gutierrez didn't return phone calls seeking comment.

State Public Security Director Mario Bautista confirmed two were killed in the clash and denied reports of as many as four deaths, state news agency Notimex said. President Vicente Fox's ministerial cabinet called an emergency meeting to study the situation, presidential spokeswoman Carolina Diaz said in a phone interview from Mexico City.

``The cabinet is working on it right now,'' she quoted Fox as saying. ``We're following the situation.''

Strikes also continued at Grupo Mexico copper and zinc mines since March 24, where police have arrested union leaders in response to the company's request to break picket lines, the union and Grupo Mexico spokesman Juan Rebolledo said.

The government on Feb. 17 recognized Elias Morales as leader of the union in place of Gomez, sparking a conflict between Fox's government and the 250,000-member union, which staged a two-day nationwide mining and steelworker strike last month.

To contact the reporter on this story: Alex Emery in Lima at aemery1@bloomberg.net

Last Updated: April 20, 2006 16:32 EDT