Court rules against Cemex’s Venezuela bid
An international court has rejected a request by Mexican cement maker Cemex to protect it from further expropriations by Venezuela after a 2008 nationalisation of its Venezuelan assets.
The Washington-based International Center for Settlement of Investment Disputes said on its website Wednesday night that it could not take "preventive measures" in favour of Cemex, the world’s No. 3 cement maker.
Cemex had asked the Washington-based ICSID to stop Venezuela from taking control of three Panama-based cement vessels that were under the control of Cemex’s Venezuela operations before the August 2008 nationalisation.
The demand is part of a wider court case in which Cemex is seeking US$1.3bn in compensation for the seizure of its assets. Venezuela has offered about a third of that.
A Cemex spokesman said on Thursday that Panama’s Supreme Court recently gave Cemex control of the boats. He said the ICSID ruling was "irrelevant."
Shares in Monterrey-based Cemex, which has operations in more than 50 countries, fell two per cent to US$9.98 on the news in New York and 1.8 percent to 12.76 pesos in Mexico City.
"This is something that could complicate Cemex’s overall bid for compensation. It is going to take a long time," said Francisco Chavez, an analyst at BBVA Bancomer.
Cemex had hoped to use compensation from Venezuela to help reduce its US$15bn debt load as it struggles with slumping US and European cement volumes due to the global recession. Cemex took on big debts to finance its acquisition of Australia’s Rinker in 2007.
Socialist President Hugo Chavez nationalized Cemex’s Venezuelan assets, accusing the company of pollution that was harming local residents.
Cemex denied any wrong-doing, arguing it had invested heavily in its plants in recent years, switched its sales focus to the domestic market, cut exports, and increased its social programme to help low-income families build homes.
Venezuela was a profitable market for Cemex, but the nationalisation has not hurt the company’s overall earnings because its sales volumes there were small.
Published under Cement News
