Ternium seeks stake in Venezuelan steel
BUENOS AIRES, Argentina—Ternium SA wants to retain a share in Venezuela's largest steelmaker -- even as a minority partner in the company that President Hugo Chavez nationalized last week, a newspaper reported Sunday.
"We understand the decision in the political context of Venezuela," Ternium president Daniel Novegil said of Chavez's takeover of Siderurgica del Orinoco, known as Sidor. The Luxembourg-based steelmaker Ternium had owned 60 percent of the company.
"We're willing to reach an agreement, as long as the terms are fair, and we'll keep working so Sidor can continue to be successful under state control," Novegil told Argentina's Clarin newspaper in remarks published Sunday.
Chavez ordered Sidor nationalized weeks ago. But he moved to expropriate the company outright on April 30 as talks to fix a price for Ternium's 60 percent stake in the steel company stalled. Chavez said Ternium had sought $4 billion for its share, while government officials valued Sidor at about $800 million.
Miguel Octavio, an independent analyst and executive director of the Caracas brokerage BBO Servicios Financieros, estimated the value of Sidor's total assets at about $3 billion.
Novegil, who said he met with Venezuelan leaders in Caracas after Chavez's announcement last week, hopes Ternium could reach a deal to retain a share and sell the rest at a "fair" price.
"We're in the midst of negotiating," he told Clarin. "We want a fair price, which should be market value, according to investment protection treaties between Argentina and Venezuela and the protocols of Mercosur."
Novegil declined to say how much Chavez's government had offered to pay Ternium, but noted that the company's continued involvement would help it "compete on every front with the huge steel groups that are coming to the region."
Since winning re-election in 2006 on promises to steer Venezuela toward socialism, Chavez has made nationalizing industries that he considers "strategic" a top priority.
His government last year seized majority control of the country's largest telephone and electricity companies and of joint ventures run by some of the world's largest oil companies. Earlier this month, he announced plans to nationalize cement makers, including Mexico's Cemex SAB, France's Lafarge SA and Switzerland's Holcim Ltd.
Legislators opened the way for Sidor's expropriation on April 30, declaring it a "public utility." Chavez said he decreed it nationalized the same day, vowing to turn Sidor into "a socialist company."
Sidor, which once belonged to the state, was privatized in 1998. The government and a group of current and former employees each retained a 20 percent stake.
The company has since boosted liquid steel production by 50 percent to 4.3 million tons, from 2.9 million tons in 1998, Novegil said. It now produces about 85 percent of the 5.5 million tons of steel Venezuela turns out annually, according to the Belgium-based International Iron and Steel Institute.
Ternium, which has operations in Venezuela, Argentina and Mexico, is the Luxembourg-based subsidiary of Argentine-Italian conglomerate Techint, one of the largest steel-making groups in Latin America.
