Negotiation of Steel Plant Nationalization Continues in Venezuela

The Venezuelan government and Argentine steel company Ternium formed a joint commission in Caracas Thursday to negotiate indemnity for the nationalization of Ternium Sidor, which is controlled by the Argentine conglomerate Techint and is the largest steel company in Latin America.

Mérida, April 19, 2008
( — The Venezuelan government and Argentine steel company
Ternium formed a joint commission in Caracas Thursday to negotiate indemnity
for the nationalization of Ternium Sidor, which is controlled by the Argentine
conglomerate Techint and is the largest steel company in Latin America.

Meanwhile, the United
Steel Industry Workers Union (SUTISS), whose 14-month collective contract
dispute led to the company's nationalization on April 9th, initiated
collective contract negotiations with the government. Groups from both countries
weighed in on the issue in the scope of regional integration efforts.

Techint revealed in a
statement Friday that Ternium could maintain 20% participation in the company,
while the government acquires a 60% share. Ternium`s stake in Sidor constitutes
over a quarter of its total operations worldwide and is worth $2.4 billion
according to company receipts, Techint announced.   

The Venezuelan Vice
President Ramón Carrizalez declared that the government "comes into
negotiations, like we have with several companies…ready to pay what must be

Techint President
Paolo Rocca pleaded with Argentine President Cristina Fernández to "confront
the Venezuelan government in defense of national capital," but Fernández has
not made public statements on the matter. 

Former Argentine
President Néstor Kirchner had quelled nationalization threats against Techint
by Venezuelan President Hugo Chávez in May 2007 by negotiating a deal in which
the company promised to prioritize the Venezuelan market.

A transition
commission headed by the Venezuelan Minister of Basic Industries and Mining, Rodolfo
Sanz, was also formed last week to negotiate the collective labor contract with
Sidor workers. 

Sanz, who is simultaneously
president of Venezuela`s principal state owned mining corporation, assured that
the workers will retain their 20% share in Sidor, and that "Sidor will continue
to be a successful company with greater humanism," while it is "put at the
service of national development."

SUTISS President José
Rodríguez said the workers' salary demands remain the same, and they hope to
incorporate Sidor's estimated 9,000 contract workers into the collective contract,
a proposal supported by President Chávez, who criticizes Sidor for having cut its
permanent work force from 13,000 to 5,000 while it received subsidized inputs
from the Venezuelan government.

Sidor workers occupied
and shut down the plant directly following the nationalization in order to
avoid "irregulaties" until further notice was received from the government,
according to SUTISS President José Rodríguez.

Despite the
precautions, however, the management was able to block worker access to the
automated production system, which the workers deemed an act of "sabotage" reminiscent
of the paralysis of the computers of the state oil company PDVSA during the
management-led strike in late 2002. 

"The company alleged
that the system was down because of a technical failure," one worker told the
Venezuelan state television station VTV, suspecting that the company used the
opportunity to destroy confidential information or harm the system.

Soon after, the
workers began deliveries to the national market. Over the weekend exports began
again, SUTISS General Secretary Nerio Fuentes told the press. 

The National
Coordinator of the pro-Chávez National Workers Union
(UNT), Orlando Chirino, praised the workers' resilience since the
nationalization and said the workers should assume full control of the company
by way of a worker control committee "elected democratically by the workers."

He also suggested the
acts of sabotage by the management were grounds for indemnity to be cancelled
and for the money to instead pay for worker salary increases. 

The workers are the
"most willing by way of their accumulated collective knowledge, work
experience… to defend the company, and protect it from any outside or internal
threat and guarantee its security and full functioning," Chirino advocated.

However, the Workers
Federation of the State of  Bolívar expressed concern that Sidor's 10,500 ex-workers,
who are now class B stockholders in the company, will be negatively affected by
the nationalization, since company stocks dropped 10.37% in New York following the nationalization,
according to the Venezuelan daily El Universal. 

Also, the Argentine
Metallurgy Workers Union complained in a letter to Chávez that the
nationalization was a "regional undertaking" that will make them less
competitive in their national market.

The letter made
explicit reference to MERCOSUR, a South American economic integration
initiative in which Venezuela aspires to become a member, urging that Chávez "take
the necessary measures so that this experience of Latin American integration is
not frustrated." 

This sentiment was
echoed by the association of the most powerful Argentine industries, the
Industrial Union of Argentina (UIA), which announced in official statements
that "the integration of Venezuela as a partner in MERCOSUR requires,
without a doubt, respect toward reciprocal investments, and moreover the
promotion of projects of complementary production."

The UIA also called Ternium
Sidor a "project that materializes in a successful way the integration
among Argentina, Brazil, and Venezuela," and said the nationalization
would have a negative affect on this trend. 

However, in the
opinion of Mario Bragachini, a specialist from the Agricultural Technology
Institute, a consulting firm that has worked with the Venezuelan government, the
nationalization of Sidor will not affect investments by Argentine agricultural
firms in Venezuela because there is such a strong demand and supply
relationship between the two countries.

In the past two years,
40 Argentine enterprises exported $100 million in machinery to Venezuela, and
in February Chávez invited a group of Argentine companies to explore potential
investment deals to help Venezuela promote its agricultural sector to combat
food price inflation, according to El Universal. 

In the wake of the
nationalization, some Argentine firms announced their investments in Venezuela
would proceed as usual, while others said they would "think a little more" and
called the nationalization "an alarm," according to the Argentine daily La

Alejandro Uzcátegui,
president of Entrepreneurs for Venezuela, a Venezuelan non-profit association
of small and medium size enterprises, supported the nationalization, and asked
that negotiations allow benefits to the small and medium enterprises involved
in the iron and steel supply chain to continue. 

Early last week, the
World Union Federation pledged its support for the nationalization and its
solidarity with SUTISS workers.

"As an international
union movement, we feel proud that in Venezuela there are combative unions that
defend their class interests but also their national interests," General
Subsecretary Valentín Pacho told Venezuelan alternative media sources. 

The Argentine Communist Party also manifested its
support for the nationalization, which "is inscribed in the logic of
recuperation of natural and industrial resources that are strategic for the
development of Socialism of the 21st Century," according to the General
Secretary of the party, Iván Piñiero.