Venezuela to nationalise Cemex unit

August 19, 2008

, CARACAS, August 19  – President Hugo Chavez announced Monday that Venezuela was nationalising the local unit of Mexican cement giant Cemex, after negotiations to give Caracas a majority shareholding failed.

"We\’ll take over the cement plants at midnight because the deadline has come and they\’ll become state property," President Hugo Chavez told a meeting of the United Socialist Party of Venezuela.

He said the Cemex takeover and prior nationalizations of oil and telephone companies were "steps on the way to socialism."

A government deadline expires Monday at midnight for Venezuela\’s top three foreign-owned cement companies — Mexican, French and Swiss — to reach an agreement giving Venezuela a 60 percent controlling share of each.

"It was not possible to arrive at an agreement with them (Cemex) and the next step that we must take is to proceed with expropriation," Venezuelan Vice President Rafael Carrizales told reporters.

He said that after Cemex is taken over, both sides, by law, will have to agree on a fair value for the company\’s assets, which Venezuela will then pay Cemex owners, or have the case settled in court.

Cemex accounts for half of Venezuela\’s total cement production, with France\’s Lafarge and Switzerland\’s Holcim taking up the rest.

Carrizales said that after "friendly negotiations" with Lafarge and Holcim, Venezuela obtained 89 percent controlling shares of the French company for 257 million dollars, and 85 percent of the Swiss firm for 552 million.

The move on Cemex follows President Hugo Chavez\’ announcement in April that he would nationalize the entire cement industry. In June, he issued a decree giving the companies 60 days to negotiate handover agreements.

Chavez on Sunday referred to the deadline in his weekly radio program, saying: "So tomorrow, we\’ll go ahead with nationalizing and regaining the cement industries."

The reason behind the cement industry takeover, Chavez said in April, was to create a large national cement company in order to build much-needed housing for the poor.

Since 2004, between 40,000 and 50,000 housing units have been built per year, well short of the 100,000 needed, according to the industry.

Since first elected in 1998, Chavez, a populist and leftist former army colonel, has been pushing through a socialist agenda. He nationalized oil fields in the Orinoco basin in 2006.

Since last year, he has nationalized power, telecommunications, oil, steel and the French and Swiss cement companies.

And on July 31, Chavez announced his intention to negotiate the takeover of the Bank of Venezuela with its Spanish owners, Grupo Santander.

Chavez on Monday said Venezuela would soon take over Bank of Venezuela "for the good of the people."

"The government will not stop, now or ever," Chavez said of his socialist agenda.

"While I\’m in power, with your help and God\’s, Venezuela will march down the road of equality, social justice and socialism."

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