August 20, 2008
CARACAS -- Mexico urged Venezuela to negotiate with its cement producer Cemex SAB on Tuesday after the Venezuelan government seized control of its cement plants, saying no deal could be reached on the terms of a nationalization ordered by President Hugo Chávez.
Mexico's Foreign Ministry said its ambassador to Caracas delivered the message to Chávez's government after Venezuelan officials backed by National Guard troops took control of Cemex plants across the country late Monday.
Ambassador Mario Chacón urged the Venezuelan government to continue negotiations with Cemex under ''the principles of dialogue, nondiscriminatory treatment . . . and in agreement with the applicable legal standards,'' the Mexican Foreign Ministry said.
It said the Mexican government aims to ``assure that the process carried out by Venezuelan authorities follows applicable legal standards and respects the principle of nondiscriminatory treatment.''
Chávez referred to the nationalization move in a Tuesday night speech, without mentioning Cemex.
''We've nationalized the cement industries,'' Chávez said. ``It was time.''
Oil Minister Rafael Ramírez led government officials and workers at the takeover of a Cemex plant late Monday. He said the expropriation of the Cemex subsidiary was to be formalized Tuesday with the signing of a presidential decree.
Ramírez said no deal could be reached on compensation terms after a 60-day time frame for talks laid out in a June presidential decree, and that Cemex's request of more than $1.2 billion was much too high. He said a thorough appraisal will determine fair compensation to pay Cemex.
The Caracas Stock Exchange temporarily halted trading in local shares of the Cemex Venezuelan subsidiary on Tuesday, while Cemex shares declined on U.S. and Mexican stock markets.
Analysts and business leaders said the expropriation could hurt private investment in Venezuela.
The Cemex takeover increases uncertainty for investors and contributes to a ''high-risk'' business climate, said Noel Alvarez, a leader of the Fedecamaras business chamber. He noted that official figures last year showed a decline of $643 million in foreign investment.
Economist Pavel Gómez said by nationalizing the cement businesses, the government appears to be aiming to boost housing construction and other infrastructure projects. He said it is also considering public opinion and ``trying to generate credibility regarding its ability to play tough with these sorts of businesses.''
Gómez predicted businesses will ''feel ever more threatened'' and likely take measures to protect themselves such as holding off on investments.
Two other cement companies, Lafarge SA of France and Switzerland's Holcim Ltd., signed agreements Monday to sell majority stakes in their Venezuelan units to the government.
Venezuela agreed to pay Paris-based Lafarge $267 million for an 89 percent share of its local unit, and to pay Zurich, Switzerland-based Holcim $552 million for an 85-percent share of its operations. Both companies will stay on as minority partners.
Chávez on Monday called the cement nationalization one of several ''steps toward socialism,'' which have included nationalizations of telephone and electricity companies, the country's largest steel maker and a handful of major oil projects.
Cemex says its Venezuelan assets include three cement plants, 30 smaller concrete plants, a shipping terminal and other facilities. It acknowledged Venezuela's move to assume control of its plants in a statement, but declined further comment.
U.S.-traded shares of Cemex fell 2.6 percent to $20.65 on the New York Stock Exchange on Tuesday, the first full day of trading since the seizure took place. On Monday, shares fell 3 percent as the expropriation plans were announced.
The Caracas Stock Exchange, meanwhile, suspended trading in shares of Cemex Venezuela CA for 24 hours ''to protect the rights of minority investors'' amid ''events about which there has not been sufficient information,'' the National Securities Commission said.