MercoPress. South Atlantic News Agency

Chavez nationalizes steel sector partly owned by Argentina

President Hugo Chavez announced plans to nationalize Venezuela's biggest steel maker, Sidor, which belongs to the Argentine-Italian group Techint, with shares in the New York Stock Exchange. The group has close links with the Kirchners.

Sidor has been undergoing industrial action for months and Techint requested in a letter addressed to Venezuela's president Hugo Chavez his intervention "to help find a constructive solution to the labor conflict". The letter was made public Wednesday a few hours after President Chavez announced the nationalization of the Sidor plant (Siderúrgica del Orinoco) belonging to Techint which in turn responds to Luxembourg based Ternium. The nationalization decree refers to the "arrogance" with which Sidor officials addressed the collective labor bargaining process for the new contract which was started in March 2007. Techint which is known globally as one of the world's main suppliers of steel pipes for the oil industry purchased Sidor (one of the largest from the region) in 1997 for 1.2 billion US dollars. The Argentine-Italian group holds a 60% stake, the Venezuelan government 20% and the workers and staff the other 20% In the letter signed by Techint CEO Paolo Rocca, a close friend of the Kirchner family in Argentina, he underlines the "significant improvement in Ternium Sidor salary and benefits offer to Sidor workers" as well as the need to "keep strengthening" the close links of Venezuela, Brazil and Argentina in the framework of Mercosur. Ternium Sidor and the plant's union, Sutiss have been discussing the new contract since March 2007 in the midst of growing animosity with a wave of stoppages and strikes. "The incorporation to the payroll of the steel plant of over 600 workers, the increase in old age minimum pensions for over 2.500 retired personnel and the willingness to offer a pay increase of 130%" were some of the "significant improvements" made by Ternium Sidor emphasized Mr. Rocca in his letter to the president of Venezuela. Rocca played on the strong links between Venezuela, Argentina and Brazil "given the outstanding participation of Techint in the three countries". Technit is also involved in major public work contracts in Latinamerica. He also invited President Chavez, "with the utmost sense of responsibility and participation", to join the labor contract talks so that the close links between Ternium and the Venezuelan government "help to overcome the current situation which goes back for over a year". Venezuelan vice president Ramon Carrizalez announced on Wednesday the nationalization of Sidor, which had been privatized in 1997. "I was in contact with President Chavez and I told him of the great arrogance of the corporation that was abandoning the negotiations round because it had no further counter offers and Chavez instructed me to inform them that the government was taking control of the company", said vice president Carrizalez. "This is a government that supports workers", he said adding he was confident the "sovereign decision" from the Venezuelan government "would not affect relations with the Argentine nation". "We have excellent relations with Argentina and that country has always been most respectful of our domestic decisions", said vice president Carrizalez. In the past two years the Chavez government has taken control of foreign owned telecommunications, electricity and gas companies and just a few days ago the cement sector, involving Mexican and Swiss companies. President Chavez believes companies should concentrate on the domestic market before overseas sales. Chavez had already threatened to take control of the company last year unless Sidor sold more of its steel in Venezuela. At the time the intervention of Argentine president Nestor Kirchner helped Mr Rocca out of the situation.