Venezuela takes step to expropriate cement company assets

Venezuela takes step to expropriate cement company assets
Published: 06 August 2007

Venezuela has declared the assets of the Corporacion Cemento Andino of public utility and social interest, according to a notice in the latest official gazette. 
 
The resolution, a step previous to actual expropriation, becomes effective immediately and includes all the assets, such as "machinery, buildings...owned by Cemento Andino SA," located in the mid-west state of Trujillo, according to the notice.  
 
Cemento Andino’s assets in Venezuela are owned by Cementos Argos, the Colombian largest cement company, headquartered in Medellin. Argos has disputed ownership of these assets and a year ago Venezuela’s Supreme Court named an "ad-hoc" board to run the company in a bid to "protect the well-being of workers...as well as those (locals) that claim ownership of the company," the resolution noted.  
 
"If the Venezuelan government decides to nationalize the plant we will get a compensation. We just hope the Venezuelan government recognizes a fair price for those assets in which we invested $80 million," Friday said an Argos official who declined to be identified.  
 
Argos has been gradually writing off the Venezuelan plant from its net assets.  
 
"We no longer count with that asset. This won’t affect our financial results nor our financial statements," he added.  
 
The Venezuelan plant produces on average 800,000tpa of cement, the Argos official added.  
 
President Hugo Chavez has threatened to seize failed companies and those refusing to follow his government’s rules. Chavez has also often threatened cement makers with expropriation if they violate state-imposed cement price controls and refuse to produce enough to supply the economy’s needs.  
 
A booming construction sector fueled by hefty government spending has lately led to cement shortages. Cement producers have also been forced to reduce exports to supply local needs.  
 
As part of his plan to rely as little as possible on the domestic private sector, Chavez has struck an accord with Iran to build a state controlled cement plant, a project that has yet to reach fruition.  
 
Chavez has also imported some cement from Cuba, a move he has touted as proof he can do without local cement producers.