Venezuela Nationalizes Cement Sector
Friday April 4, 3:39 pm ET
By Christopher Toothaker, Associated Press Writer
Venezuela Blames Foreign Cement Makers for Shortages, Prepares Nationalization
CARACAS, Venezuela (AP) -- President Hugo Chavez's government justified its plans to nationalize the cement industry Friday by accusing foreign-owned cement companies of restricting supply to boost local prices while boosting exports to maximize profits.
Industry Minister Rodolfo Sanz said the foreign-owned companies that dominate cement making in Venezuela have been "producing below their capacity so supplies don't increase, exporting their production and creating domestic market shortages."
But the nationalization measure Chavez announced Thursday night quickly led to friction with the government of Mexico. A Mexican company, Cemex SAB, supplies about half of Venezuela's cement.
Mexican Finance Secretary Agustin Carstens called Chavez's order "an inappropriate action that does not respect the property nor the rights of Mexicans."
"There is definitely nothing more to do than condemn this action," Carstens told a news conference in Mexico.
France's Lafarge SA and Switzerland's Holcim Ltd. also are affected by the order.
Chavez said he cannot allow businesses to continue exporting raw materials needed to tackle a domestic housing shortage. He said it would occur in "the short term."
Sanz said the government will soon start talking with the companies "to evaluate their assets" ahead of compensation.
The cement action is Chavez's most radical nationalization move since early 2007, when he announced the takeover of this oil-rich South American nation's electricity, telecommunications, natural gas and oil industries.
Government officials argue most of the country's basic industries should be controlled by the state to contribute to national development, and Venezuela has suffered from a severe housing shortage for decades.
Cemex runs three cement plants in Venezuela that produce about 4.6 million tons annually, as well as 13 distribution centers and four maritime export terminals.
Cemex's figures seemed to contradict Sanz's allegation. It reported that its sales in Venezuela rose by 17 percent last year over 2006, with concrete volumes up by 10 percent because of construction boosted by public spending.
Cemex exports from Venezuela fell by half, it said, because the company focused on supplying the domestic market.
Holcim has two plants that produce 3 million tons a year. And Lafarge has two plants that produce 1.5 million tons a year, according to the company's Web site.
Holcim spokesman Peter Gysel said Friday the Zurich-based company has not yet been contacted by Venezuelan authorities and Cemex spokesman Gerardo de la Torre also said his company had not been officially notified of the plan.
"We are requesting a meeting with the government to understand the scope of the statements made by President Chavez," he said.
Mexico's Foreign Relations Department said it "will do everything within its reach to protect the interests of Mexican companies operating abroad."
Last year, Chavez said many of Venezuela's cement factories prefer to sell their product abroad at higher prices and warned: "If the cement factories do not (sell in Venezuela), we will occupy them."
Associated Press writer E. Eduardo Castillo contributed to this report from Mexico City.
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