Nationalized Cement Maker Starts Arbitration Against Venezuela

Mérida, March 24, 2009 (venezuelanalysis.com)– The second largest cement producer in the world, Holcim of Switzerland, announced on Monday that it was starting international arbitration to obtain what it called “full compensation” for its assets. Meanwhile, the Chávez government is also stepping up its efforts to take over abandoned hotels.

The arbitration has gone to the International Center for Settlement of Investment Disputes (ICSID) of the World Bank,

The Venezuelan government took over Holcim Venezuela and other foreign cement companies last year as part of an effort to reduce costs, direct production more towards domestic needs than export profits, and to boost housing construction and infrastructure development.

The government nationalized Holcim in June last year, and signed a pre-agreement with the company in August in which compensation was guaranteed. Holcim claims the government suspended communications with it in October.

According to the private media, the Venezuelan government said it agreed to pay $552 million for 85% of Holcim, but the company says it hasn’t received anything.

It says it is trying to get compensation “equivalent to the total of the exact market value of all [our] assets at the time of nationalization, an amount substantially more that the value imposed on [us].”

According to AFP, Holcim’s assets included two cement plants, various primary material quarries and various factories, and its spokesperson is refusing to stipulate the sum Holcim is claiming in compensation. Its activities in Venezuela represent 1% of its total business.

Cemex also initiated arbitration proceedings against Venezuela in December, after the government rejected its request for compensation of $1.3 billion.

Cemex made 50% of Venezuela’s cement, and Holcim and the French company Lafarge, which was also nationalized, share equally the remaining 50%.

Government takes over hotel

Meanwhile, the minister for Tourism, Pedro Morejón, announced on Sunday that the government had taken over the Hotel Maremares in Puerto La Cruz, Anzoategui state, as it had been left “in a high state of abandonment and deterioration.”

“We are very happy because we’ve achieved justice [here] because [this hotel] was always the state’s and it was in the hands of a private company, which let it deteriorate…we have taken possession of the administration of the hotel and we are sure that all Venezuelans, visitors to Anzoategui state and to Venezuela… will be pleased because they’ll note the changes straight away,” said Morejón.

Morejon added that the five star hotel would be converted into a “point of reference for tourists, business, and the whole collective. So we could say that tourism is helping the economy of the country and that it forms part of the actions …of [President Hugo] Chávez to put the means of production in the hands of the people and the state.”

The hotel has 491 rooms, a pool, sports areas, spa, conference rooms, and a restaurant.  Of these, according to the government’s audit, 60 rooms were used by families of the private administrators, as were the hotel’s vehicles and yachts.

The takeover brings the total number of hotels taken over by the government  and now part of the state agency Venezuelan Tourism (Ventur), to seven and the tourism ministry is in the process of recuperating three others.