Venezuela to expropriate Cemex if no accord is reached
Venezuelan Vice-President Ramón Carrizales on Monday, August 18 advised that hours before expiring a deadline set by law for nationalization of cement companies, agreements were reached with Swiss group Holcim and French Lafarge, but the government failed to reach an accord with Cemex, thus it could expropriate the Mexican firm.
He explained that in the case of Lafarge, the government will purchase 89 percent of shares of its Venezuelan operations for USD 267 million. Regarding Holcim, Venezuela is to acquire an 85 percent stake for USD 552 million. Both firms will continue operating in Venezuela as minority partners.
The deadlock in negotiations with Cemex, according to Carrizales, lies in the price; Cemex is asking USD 1,3 million for its operations in Venezuela, while the government is ready to pay USD 819 million.
Venezuela takes over Cemex plants
Last April President Hugo Chávez announced his plans to nationalize foreign-owned cement companies operating in Venezuela, in June he issued a directive to begin negotiating handover agreements with cement makers, and August 18 at midnight Venezuela took control of the industry.
Cement groups Lafarge (France) and Holcim (Switzerland) agreed to the terms established by the Venezuelan government. Under the pact, they are keeping a minority stake in the cement companies, while Mexican Cemex's Pertigalete plant, northeast Venezuela, was seized on August 18 at midnight, as the firm refused to accept both the terms and the compensation the Venezuelan government proposed. Cemex suggested a price that was "way above the real price," Venezuelan Vice-President Ramón Carrizalez told reporters.
Cemex trading suspended in Caracas Stock Exchange
The Venezuelan Stock Market Commission (CNV) ordered Tuesday, August 19 to suspend for 24 hours trading of Cemex Venezuela shares, following the expropriation announcement made on the eve by Venezuelan authorities.
Cemex's type 1 shares fell 2.82 percent on early trading, whereas type 2 shares were down 1.43 percent. The price of both shares in Caracas Stock Market is VEB 0.69, Reuters said.
Cemex Venezuela was controlled by Mexican company Cemex, which is the world's third largest cement company.
Mexico asks Venezuela to continue talks with Cemex
The Mexican government asked Venezuela to keep on holding talks with cement maker Cemex, which was expropriated on August 18 in the context of nationalization of this industrial sector, Mexican ambassador to Caracas Jesús Mario Chacón told AFP on Tuesday, August 19.
The request was made in a notice sent to the Venezuelan Ministry of Foreign Affairs. There, Mexico advocates an eventual, satisfactory agreement on sale of stocks and prevention of seizure.
"We are interested in using the provision made in the decree (on nationalization), released on June 18th, to extend the term to continue talks" with the companies involved, said Chacón.
Mexican deputies recommend prudence with Venezuela
Mexican pro-government and opposition deputies made on August 19 a call to the government of President Felipe Calderón to act cautiously and prevent the nationalization of Cemex's assets from straining relations with Venezuela.
Alejandro Landero, of ruling Partido Acción Nacional (PAN), told Efe that regretfully, no deal was made to nationalize Cemex's assets, unlike companies Holcim and Lafarge, which managed to agree on a sale price.
"While there was news since April, this action took us unawares, given the character of the relations that President Calderón has tried to hold with his counterpart, President (Hugo) Chávez," he added.
Minister Rodríguez: Cemex's value under USD 400 million
According to Venezuelan Finance minister, Alí Rodríguez Araque, the recently nationalized Venezuelan division of Mexican cement maker Cemex is worth less than USD 400 million, as quoted by Reuters.
Rodríguez Araque was referring to compensation the Mexican firm could receive for its assets in the country.
Construction sector increasingly subject to govn't
In Venezuela, construction is largely subject to government investment, and now the sector's dependence on the government goes beyond funding to include the supply of materials.
As provided for under the Economic and Social Development Plan 2007-2013, the Venezuelan government is taking control of strategic areas. In a first phase, the nationalization moves focused on services, but now they are targeting the industrial sector.
Last Monday, August 18 Venezuela took over three foreign-owned cement companies by two different ways. On the one hand, it reached agreements to become the majority stakeholder in France's Lafarge and Switzerland's Holcim. On the other hand, it expropriated Mexico's Cemex.
Following the takeovers, the Venezuelan government has secured control of 98 percent of the domestic cement market.
Cemex ponders international arbitration for expropriation
Mexican cement maker Cemex said on Wednesday, August 20 that international arbitration is one of the alternatives weighed in a dispute with the Venezuelan government for seizure of its assets in Venezuela.
"Yes, it is one of some," Cemex Chief Financial Officer Rodrigo Treviño told Reuters.
Venezuelan government delegates to Pdvsa urgent expropriation of Cemex
The government announced on August 18 the expropriation of Cemex and one day later it took operational control of plants owned by the Mexican company.
In order to accelerate the expropriation process, the government ordered through a presidential decree that the Venezuelan state oil company Petróleos de Venezuela (Pdvsa) would be responsible for enforcing the expropriation. However, the Organic Law on the Organization of Cement Manufacturers establishes that the procedure must be carried out by the Ministry of Basic Industries and Mining.
Several committees from the oil industry have visited the offices of the cement company. On Wednesday, August 20 one of them went to the administrative head offices with the intention of starting to change the board of directors. However, the procedure was not implemented due to differences between the decree and the law.
Govn't to create Venezuelan Cement Corporation
President Hugo Chávez on Thursday announced the creation of the Venezuelan Cement Corporation, which would be attached to the Vice-President's Office, after Venezuela took control over the main cement makers operating in the country.
In this regard, Chávez criticized those who have condemned Cemex's expropriation, as well as nationalization of Banco de Venezuela. The Venezuelan head of state also described as "irresponsible" the Mexican cement maker for pollution in the area of Pertigalete, east Venezuela.
"They never invested in technology to remove dust," denounced Chávez, who said he has witnessed diseases caused by pollution, "the capitalist curse, more profits, they do not care if they pollute people, beaches, vegetation, animals; for they, everything is profit, money to take away."
Government resumes talks to buy Cemex
Venezuela's Vice-President Ramón Carrizales and Mexican ambassador Jesús Mario Chacón held on Friday, August 22 a meeting and agreed to resume talks with regard to the handover of cement maker Cemex to the Venezuelan state.
"As the (Mexican) ambassador expressed willingness to hold discussions, then we will gladly take a seat and make a deal with company Cemex," said the Vice-President on leaving the meeting.
"As set forth in the law, a transition committee will be organized; we will have four appointees; the company will name two people; we take control of the operations, but at the same time, we will hold negotiations."
PERSPECTIVES In the first five months of 2015, the Venezuelan government has referred, knowingly or unwittingly, to the use of the US dollar as a benchmark in the domestic market.