Create a free account to continue

Venezuelan Steel Maker To Challenge Takeover

Venezuela's largest privately owned steel producer vowed to challenge President Chavez's order to expropriate its assets even as soldiers arrived to oversee takeover.

CARACAS, Venezuela (AP) -- Venezuela's largest privately owned steel producer vowed Monday to challenge President Hugo Chavez's order to expropriate its assets even as soldiers arrived to oversee the takeover.

Sidetur's board of directors issued a statement promising legal action to protect its "employees, clients, suppliers and shareholders."

Chavez ordered the expropriation of Sidetur on Sunday, saying it is part of his strategy to transform Venezuela into a socialist state. He said the company has been selling products such as rebar at inflated prices on the domestic market, though the company said its prices have been frozen since 2006 despite rampant inflation in the overall economy.

The company statement said that under Venezuelan law, only a judge can order the takeover of a company, and only after payment of an assessed price for the assets.

Sidetur -- Siderurgica del Turbio SA -- also exports products including steel beams, angles and flats to Latin America, Africa, Asia and Europe.

The company's statement said it sold 350,000 metric tons of steel-made products on the domestic markets last year and that it is "committed to the development of the country." It suggested that the takeover could damage the government's own infrastructure and construction plans.

Sidetur also said its 1,857 workers "will be affected, along with their families, by the expropriation measure." The company is a subsidiary of Siderurgica de Venezuela SA.

Chavez ordered the National Guard to safeguard the company's plants as his government proceeds with the expropriation and he urged the company's employees to cooperate with government officials rather than protest the takeover.

Soldiers were posted on Monday at the entrance to a storage facility in Caracas where Sidetur stockpiles scrap metal. Dozens of workers were outside, protesting the planned takeover. One group of men held up a banner reading: "Expropriation equals more unemployment." A smaller group of Chavez backers demonstrated nearby to support for the takeover.

Chavez has ordered the expropriation of dozens of privately owned companies since taking office in 1999. Last week, Chavez ordered the expropriation of U.S.-based glass container manufacturer Owens-Illinois Inc.'s subsidiary in the South American country.

He announced plans to expropriate Agroislena CA, a leading farm supply business, earlier this month.

Chavez has said the government will pay a fair price for the expropriated companies.

The leader of Venezuela's largest business chamber, Fedecamaras President Noel Alvarez, urged the Supreme Court to uphold private property rights, saying a wave of government-ordered expropriations have violated the legal rights of businessmen.

The president of Venezuela's state-owned steel maker Sidor, Carlos de Olivera, said the government's probable acquisition of Sidetur, which produces about 40 percent of the rebar consumed nationwide, would give the state control over 87 percent of the domestic market.

Olivera said the seizure of Sidetur is necessary to provide the government with sufficient low-priced raw materials for the construction of infrastructure and houses.

"Iron and steel have an impact on development projects focused on construction," De Olivera told state television. "We now feel strengthened with this measure."

He echoed Chavez's accusations that Sidetur was selling products to construction firms at inflated prices.

"Some were paying exorbitant prices for rebar. That cannot be permitted," he said.

More in Operations