10 de abril 2008 - 00:00

Chavez loyal to his threat renationalises Sidor, a Techint's subsidiary

The Kirchner couple, Hugo Chavez and Paolo Rocca in a summit last year in the city of Mar del Plata. The then president interceded for Sidor with Chavez. His mediation did not last much.
The Kirchner couple, Hugo Chavez and Paolo Rocca in a summit last year in the city of Mar del Plata. The then president interceded for Sidor with Chavez. His mediation did not last much.
Venezuela's President Hugo Chavez has ordered the nationalization of a large foreign-owned steelmaker, extending a wave of takeovers meant to create a socialist state in the oil-exporting South American country.

Just days after Chavez announced the takeover of the cement industry, his government said on Wednesday that steelmaker Ternium Sidor would fall back into state hands, sending the Argentine-controlled company's shares tumbling.

Chavez increased state control of swathes of the economy in a multibillion-dollar campaign last year but paused in recent months to focus on crime and trash collection after voters rejected his push for wider powers in a December referendum.

Venezuela's Vice President Ramon Carrizalez accused parent company Ternium of showing more concern for its plant machinery than its workers in a fierce labor dispute that prompted the takeover of the country's largest steelmaker.

He said that the firm would be compensated and could even stay on as a minority partner.

"In this government, the worker comes first," Carrizalez said while announcing the takeover of the steelmaker, which Ternium says represents a quarter of its total sales.

Jubilant workers at the sprawling steel complex about 300 miles (500 km) southeast of Caracas said they welcomed the news after months of short strikes in the drawn-out dispute.

"It was high time the state got Sidor back from the claws of this miserable multinational," said Sidor union president Jose Rodriguez.

Ternium's New York-listed shares fell 10.37 percent to $34.67 on Wednesday.

Chavez is a former paratrooper who first tried to seize power in a botched coup. Since winning office at the ballot box in 1998, he has implemented much of his coup-era manifesto to renationalize companies privatized by prior governments.

Chavez began threatening to swoop on the steel firm last year during the takeover of energy and telecom companies.

He renewed his nationalization campaign last Thursday by ordering the takeover of the country's largest cement companies, which are all foreign-run. He has also threatened in the past to nationalize banks and food companies.

CHAVEZ'S COMPLAINTS

Criticized by supporters for missing home-building targets, Chavez complains the steel and cement industries do not put a high enough priority on supplying the domestic market. Now he will almost certainly force them to change.

"The takeovers of both cement and steel industries will be used to breathe new life into construction in Venezuela," Lehman Brothers analyst Gianfranco Bertozzi said in a report.

Last year's nationalizations targeted U.S. and European companies but the latest wave has also included companies from Latin America.

Carrizalez said he did not expect the steel nationalization to hurt relations with ally Argentina, whose government did not respond to telephone calls and e-mails requesting comment.

Ternium is a New York-listed company with a market capitalization of about $7.7 billion. It has annual sales of about $10 billion. Ternium Sidor president Ricardo Prosperi said in Venezuela sales were $2.4 billion.

The government declined to give an estimate of the value.

The complex produces about 4.5 million tonnes of liquid steel annually and has 5,600 unionized workers, plus more than 4,000 contract employees.

It has struggled this year with sporadic strikes and growing worker anger at a conflict over pay and conditions that turned ugly in March when a union leader was shot and wounded as workers and police clashed.

Ternium's main operations are in Mexico, Venezuela and Argentina. For the fourth quarter of 2007, it reported a net profit of $221 million. Its holdings include steelmakers Siderar in Argentina and Grupo Imsa in Mexico.

The Venezuelan operation is 60-percent controlled by Ternium, with the rest belonging to the state and workers.

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