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CARACAS: The Venezuelan government has locked up control of more than 90 per cent of the domestic cement industry with its nationalisation of one foreign-owned plant and pressured buyout of two others.
In the most recent of a series of state takeovers of key foreign-controlled businesses, Energy and Oil Minister Rafael Ramirez led workers and supporters to take symbolic control of the Mexican-owned Cemex plant in the eastern part of the country.
The move came after talks on a buyout failed to conclude before a midnight Monday deadline, and gave Venezuela control of Cemex's operations in the country, including its 4.6 million tonnes a year capacity, half of all Venezuelan cement production.
Cemex, placed in the hands of the powerful state oil monopoly PDVSA, was added to the deals in which the government obtained a 89 per cent controlling interest of French cement giant LaFarge's local operations for US$267 million, and 85 per cent of Swiss firm Holcim's plant for US$552 million.
"From this moment a decree of expropriation is in effect and the job stability of workers is guaranteed by the Venezuelan state," Ramirez announced.
"The interest of Venezuelans is placed above business interests."
Cemex made no comment on the move beyond acknowledging to the Mexican Stock Exchange: "According to a press release issued by Petroleos de Venezuela S.A. (PDVSA), PDVSA will proceed to take operational control of the plants of CEMEX Venezuela."
However, Mexico urged Venezuela to continue talks with Cemex.
"The Mexican government has formally informed Venezuela of its support for the company's request to continue negotiations," Mexico's foreign ministry said in a statement.
Reports said that Cemex had been seeking more than US$1.3 billion for its activities in Venezuela, a price Venezuela considered too high.
In April, leftist Venezuelan President Hugo Chavez announced he would take control of the cement industry, as he has with the local operations of major foreign oil companies, telecommunications businesses, a major iron and steel business, and most recently a bank.
The government justified its takeover of the cement business as necessary to boost housing construction.
Chavez was to sign the nationalisation decree for the Cemex Venezuela facilities, after which accountants will set a value on the business and seek agreement on that with the Mexican parent.
If the two sides cannot reach agreement in 60 days, the case will go to arbitration.
Mexico said Cemex could count on its support to "continue negotiations based on the principles of dialogue, non-discrimination, compromise and openness."
The government aims to "watch over Mexican business interests" and ensure that the process carried out by the Venezuelan authorities remains within the law, the foreign ministry statement added.
“I think there is still room for negotiation. We are not at the point of no return," said Asdrubal Oliveros of the company Ecoanalitica, which was involved in the negotiations.
"The Cemex case is very complicated, but the numbers which we are using for it are close to the government's offer," he said.
He said that rules for listed companies like Cemex Venezuela on the Caracas stock exchange had complicated the talks, including requirements that a public offer be made in the case the local company is sold.
He added the Venezuelan government had become "very upset" when Cemex sold shares in the company recently to an offshore firm called Cemex-Venezuela.
According to former Venezuelan Central Bank economic researcher Jose Guerra, the latest move on the cement industry continues the government's "general trend toward nationalising the economy."
He pointed out that in other state takeovers, such as for iron and steel processor Orinoco Ternium-Sidor in May 2008, or for the foreign operators in the oil-rich Orinoco Belt region, output fell after the state claimed control.
"At Sidor production has fallen some 25 percent. Neither has there been progress in the Belt."
According to Guerra, nationalisation means "bad business for the Venezuelans."
- AFP/yb
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