Here He Goes Again: Chavez Nationalizes the Cement Companies

Hugo Chavez, President of Venezuela, has already “nationalized” several of the oil facilities in the country that were owned and operated by the likes of ConocoPhillips, ExxonMobil and Total.

Now, several months later, he’s at it again. This time it’s the cement makers. Because, after all, if only the government owned the cement companies, there would be more cheap homes built.

Right?

From the Wall Street Journal:

Venezuela said it will take majority stakes in the local units of Cemex SAB, Lafarge SA and Holcim Ltd. as it divulges the first details of a nationalization plan that will affect the world’s biggest cement producers.

The nationalization, announced last week, is designed to deflect criticism that the socialist government of Hugo Chávez isn’t delivering on its promises of new housing and other infrastructure projects, experts said.

“The Venezuelan state will take control of these companies. We told them all three will be subject to this [nationalization] measure,” Oil Minister Rafael Ramirez said on state television.

The plan announced by Mr. Ramirez mirrors Venezuela’s nationalization of the oil industry. Venezuela will purchase at least 60% of the local units of foreign cement companies operating in Venezuela.

No details were available on how much Venezuela intends to pay for the stakes — and how the cement companies will respond to any future offers.

In a statement Monday, Mexico-based Cemex expressed its willingness “to engage in a dialogue with the authorities to find a mutually satisfactory solution,” adding that the company was “confident that it has the support of authorities to guarantee the safety of its personnel and the integrity of its facilities” during negotiations.

Officials at the Venezuelan units of France’s Lafarge and Swiss-based Holcim didn’t return calls seeking comment.

If the nationalization of the oil companies are any indication, the cement companies will get pennies on the dollar for their “investment” in the country.

And what for Venezuela?

According to the Journal, since nationalizing the oil sector, oil production is actually down. Is anyone surprised? Did Chavez really think he could kick out highly skilled engineers and other oil personnel from, say, Exxon, and run the facilities as productively?

Of course not.

Less oil out of the ground means less money, in the long run, for Venezuela.

And so it will be the same with the cement manufacturers as well.

But it begs a bigger question: who will want to put ANY money into Venezuela now? Why would you open a factory there?

You wouldn’t.

International businesses are going to start taking a long look at Venezuela’s neighbors for expansion- including Columbia - which is booming. If the US trade agreement passes with Columbia- Bogota or Medellin might be the next place to be in Central America.

You heard it here first.