Venezuela expropriates steel maker

In this photo released by Miraflores Press Office, Venezuela's President Hugo Chavez, top, poses with an unidentified retired worker during a meeting with workers in Caracas, Wednesday, April 30, 2008. Chavez ordered the expropriation of Venezuela's largest steel maker. His government will turn Siderurgica del Orinoco, Sidor, into "a socialist company," Chavez told workers gathered for a televised event at a Caracas theater. (AP Photo/Mirafores Press Office)

CARACAS, Venezuela—President Hugo Chavez on Wednesday ordered the expropriation of Venezuela's largest steel maker after attempts by the government to acquire a majority stake in the company failed.

Venezuela's government will turn Siderurgica del Orinoco, which was controlled by Luxembourg-based Ternium SA., into "a socialist company," Chavez told workers gathered at a Caracas theater.

Sidor, as the company is known, "has now recuperated by the revolutionary government," Chavez said.

Since winning re-election in 2006 on promises to steer his country toward socialism, Chavez has made nationalizing major industries a top priority.

His government last year seized majority control of the country's largest telecommunications and electricity companies, and of joint oil ventures run by some of the world's largest oil companies. Earlier this month, he announced plans to nationalize cement companies including Mexico's Cemex SAB, France's Lafarge SA and Switzerland's Holcim Ltd.

Chavez ordered Sidor nationalized earlier this month, siding with workers who sought improved salaries and benefits. Venezuelan officials had been talking with Ternium representatives to negotiate a price for its 60 percent share in the company, but the two sides were unable to reach an agreement.

Chavez this week vowed his government would not pay the $4 billion he claimed Ternium was seeking, calling the amount excessive. Government officials had estimated Sidor's total value at about $800 million.

Ternium representatives in Venezuela could not be immediately reached for comment late Wednesday. Ternium is controlled by Argentine-Italian conglomerate Techint Group.

Sidor, a former state company, was privatized in 1998, but the government has retained a 20 percent stake, while current and former employees hold the remainder.

The company produces about 85 percent of the 5 million metric tons (5.5 million U.S. tons) of steel Venezuela turns out annually, according to the Belgium-based International Iron and Steel Institute.

Lawmakers loyal to Chavez opened the way for Sidor's expropriation on Tuesday, declaring the conglomerate a "public utility" -- a legal prerequisite to expropriation.

Miguel Octavio, executive director of BBO Servicios Financieros, a Caracas brokerage, estimated Sidor's total assets at roughly $3 billion. The company employs about 4,500 workers.