Venezuela to nationalize steel company

Venezuela’s government announced April 9 it will nationalize the country’s largest steel maker following months of tense negotiations between the foreign-owned Sidor and its workers, who have been demanding better salaries and benefits. Days earlier, President Hugo Chávez announced a state takeover of leading cement companies.

Vice President Ramon Carrizalez said the nationalization is meant to protect workers’ rights and accused Sidor of “great arrogance” in the talks. “The president has instructed me to inform the company that the government is taking control of the business,” Carrizalez told reporters, saying “there was no will on the company’s part to settle the conflict.” He said the government will negotiate and pay fair compensation, and that Sidor’s owners might be able to keep 20% of the company.

Sidor’s parent company, Ternium of Luxembourg, is controlled by Argentine-Italian conglomerate Techint Group. Sidor—for Siderurgica del Orinoco—was privatized in 1998 and is Venezuela’s top steel maker. Ternium’s shares on the New York Stock Exchange dropped more than 10 percent following the news.

A leader of the Unified Union of Steel Industry Workers (SUTISS), Nerio Fuentes, told the Venezuelan TV network Globovision that company workers have taken control of the steel plants in the eastern state of Bolivar. Workers have repeatedly protested at Sidor’s plants in recent months, at times clashing with police.

Chávez said the government “has to demand with great firmness that any company…comply with Venezuelan laws.” Last year, he warned Sidor’s owners that he might nationalize the company, complaining it was selling the bulk of its production overseas instead of giving priority to Venezuelan industry. At the time, Chavez said if Sidor didn’t agree to supply the domestic market first, “I’ll grab your company…and I’ll pay you what it’s worth.”

The government is also discussing terms with cement companies Cemex of Mexico, Lafarge of France and Holcim of Switzerland. The government says these companies also will be allowed to stay on as minority partners. (AP, April 9)

See our last post on Venezuela.