Mérida, August 21, 2008 (venezuelanalysis.com)– Daniel Novegil, a manager of the Argentine-Italian firm Techint, nearly signed a deal Monday to sell half of the steelmaker SIDOR for $1.65 billion to the Venezuelan government, which nationalized the steel plant last April.
The contract, which would be signed by Novegil and the Venezuelan Minister of Basic Industries, Rodolfo Sanz, would leave 90% of SIDOR in control of the administration of President Hugo Chávez.
By retaining a 10% share, Techint could maintain a small presence in the management of SIDOR, which is located in southeastern Venezuela and is the largest steelmaker in the Andean region.
When SIDOR was nationalized, Techint asked for $3.6 billion for its 60% share, which it had purchased for $1.5 billion when the steel plant was privatized by the Venezuelan government in 1997.
The government initially offered $800 million, arguing that environmental damages, outstanding company debts, and the long overdue collective labor contract that sparked the nationalization lowered the value of the company’s share.
According to a statement released by Techint Tuesday, “The negotiations with the Venezuelan government continue their course.”
Techint “continues reserving all its rights under contracts, investment treaties, and Venezuelan and international legislation with the goal of receiving a fair price for its participation in SIDOR,” the company statement continued.
The statement was sent to the Buenos Aires stock exchange, in which the stocks for two Techint-owned companies that manufacture products along the steel supply chain, Tenaris and Siderca, are traded.
A week ago, the new SIDOR management proposed that the Venezuelan government either nationalize or acquire control of three steel-related enterprises to synchronize more of the supply chain under government control.
According to a report turned in to the Venezuelan Vice President Ramón Carrizalez by the SIDOR managers, the three companies under consideration are Sidernet, La Monumental, and Techint-controlled Matesi.
In the same communiqué to Carrizalez, the SIDOR managers recommended that the government declare a state of “budget emergency” for the firm, apparently a maneuver to free up more government funds for the enterprise during its transition.
According to the report, rising prices of steel sub-products on the international and national markets have been out of step with government price regulations, costing the enterprise $172 million between August and December of 2008.
The new SIDOR managers proposed that the government adjust the prices and create a state-run SIDOR hardware store to bypass the existing chain of commercialization, so the nationalized company can fulfill its goal of “serving the communities” that are most in need.
The president of the United Steel Industries Workers Union (SUTISS), José Antonio Rodríguez, said the workers “support the nationalization of the affiliate enterprises because we consider them strategic.”