Venezuela seizes control of cement companies

As a deadline for talks expired at the stroke of midnight Monday, Oil Minister Rafael Ramirez raised a fist in the air while flag-waving workers cheered at a Cemex plant.

"Were taking over operations," Ramirez at the plant in the eastern state of Anzoategui. "With Cemex lamentably we couldn’t reach an agreement."

The government moved to take control of Cemex’s subsidiary in the country after a 60-day period for negotiating compensation laid out in a June nationalization decree by President Hugo Chavez.

Two other cement companies, Lafarge SA of France and Switzerland’s Holcim Ltd, agreed to nationalization terms for their companies in Venezuela earlier Monday. Those two companies also agreed to stay on as minority partners.

Ramirez said the government’s expropriation of Cemex’s plants would be formalized on Tuesday with the signing of a decree by Chavez.

Chavez earlier called the nationalization of cement companies one of many "steps toward socialism," following nationalizations of telecommunications and electricity companies, the country’s largest steel maker and major oil projects.

Cemex says its Venezuela assets include three cement plants, 30 smaller concrete plants, a shipping terminal and other facilities. Cemex acknowledged Venezuela’s move to assume control of its plants in a statement, but declined further comment.

Government officials said they remained far apart from Cemex on terms.

Vice President Ramon Carrizalez said that Cemex asked for some $1.3 billion in compensation, calling that "well above its real value."

The government will carry out a thorough appraisal of the company’s assets in order to establish fair compensation, Ramirez said.

One Cemex official told The Associated Press that National Guard troops took control of cement plants in Maracaibo and Barquisimeto on Monday evening, hours before the midnight deadline. The official spoke on condition of anonymity because she wasn’t authorized to speak publicly about the subject.

Of the three companies being nationalized, Cemex has the largest presence in Venezuela. It entered the country in 1994 when it bought out a Venezuelan cement company, and today has some 3,000 employees.

Venezuela agreed to pay $267 million to Lafarge and $552 million to Holcim in compensation within 60 days, Carrizalez said after the two signed accords agreeing to the terms.

Venezuela will obtain an 89-percent share of Lafarge’s business in Venezuela and an 85-percent share of Holcim’s unit in the country, while the two companies will stay on as minority partners, Carrizalez said.

Chavez, who did not attend the late-night nationalization rallies, pledged in an earlier televised speech that state-run cement businesses will help bring down prices in Venezuela. He said Venezuelan cement has been "the most expensive in the world" because the companies "are in private hands and they set the price very high."

Venezuela’s tax agency said earlier this month that Cemex owed $37.3 million in unpaid taxes for 2006 and 2007. Ramirez said the company had "serious deficiencies" in both unpaid taxes and "environmental matters."

Ramirez also complained that after plans for the nationalization were announced in April, Cemex’s Venezuelan subsidiary had improperly transferred shares it held in its subsidiaries operating in Panama, the Dominican Republic, Trinidad and Tobago and Guadeloupe. Cemex has said it simply "transferred assets" within the company.

Photo: Reuters