Chavez nationalizes hot iron briquette companies

May 22, 2009

As if he did not have enough on his plate, Hugo Chavez announced yesterday that he will nationalize all of the hot iron briquette companies, including Orinoco Iron and Venprecar, as well as pipe planta Tavsa and Ceramica Carabobo.

Hot iron briquettes are a substitute of steel scrap used worldwide. Essentially, iron ore is processed and produces a more uniform substitute for steel scrap used largely in the automotive industry. Venezuela is one of the main producers of such briquettes. The companies producing these were owned by Venezuelan, Japanese and Argentinean companies. One of them Sivensa, owner of Venprecar and Orinoco Iron, which trades in the Caracas Stock Exchange. Chavez said he would create a large briquette producing company. That seems to be the only plan.

A Venezuelan state owned company, Ferrominera del Orinoco, produces the raw iron ore for the production of briquettes. The Orinoco Iron plant has been plagued with problems since inception, it has never worked up to its full capacity.

Producing and selling briquettes is complex. Prices can gyrate wildly and it is a technically difficult process. Currently, Ferrominera can not supply these companies with all of the iron ore required, forcing some of them to import the raw material.

This is of course another liability for the Chavez Government. Another legal problem. Another future arbitration process in the horizon.

What’s next?

26 Responses to “Chavez nationalizes hot iron briquette companies”

  1. Andromeda Says:

    What’s next?
    Who’s next?

    Definitely the most asked questions in Venezuela right now.

    Miguel, do you have any information on a possible scheme that will be used by the government to sell dollars through the Banco Central?
    Is this for real?

  2. Perr Says:

    Miguel:
    Do you know if local companies can go to international arbitration to get a fair compensation? I thought that their only recourse is to go through the Venezuelan judicial system, and we all know that going through it would be a waste of time and legal fees. Can you shed some light on this?

  3. Otro Roberto Says:

    When I read about this, I cannot help but to think that he is counting with a recovery on oil prices. I do not mean a simple increase in price, but the return the highs that we saw a year ago. Even if there are surely some other reasons (the political- and control-of-the-economy factors are surely the first on the list), I would not discard any expectation on oil prices among the considerations.

  4. Ken Price Says:

    Otro Roberto:

    I do not doubt that oil prices will recover, eventually. However, the question is “when”, not “if”. Chavez is in a race to see if the recovery comes before, or after, the total collapse of the Venezuelan economy.

    The current forecasts predict NO recovery until mid-2010. I suspect that Chavez will simply su8spect all payments to foreign companies for stolen assets, and then refuse to recognize international tribunals. The Chinese will continue to purchase his oil, and foreign courts will probably drag CITGO into court, where Chavez will lose.

    Remember the old Chinese curse: “May you live in interesting times”. Things are going to become more injteresting them Venezuela can stand.

  5. deananash Says:

    None of it matters to Chavez. As long as their is enough money to keep the military happy, he survives. It’s every man for himself. It’s been that way for a long, LONG time. It even predates Castro, er, Chavez.

    You will need to see a TOTAL collapse in Venezuela before Chavez leaves the stage. To speed up the process, you should be encouraging him.

    Nationalize ALL food, from the farms, to the processors, on to the supermarkets – even the ‘national’ restaurant chains (leave the mom & pops alone).

    All pharmacies should be nationalized. ALL communications.

    The sooner you suffer this man-made tragedy, the sooner you can move on. Otherwise, the remaining choice is the death by a thousand cuts that I mentioned the other day…see Cuba/Castro, where it’s what, 50 years later?

    Want your grandchildren born in a country governed by a dictator? The same dictator your children were born under? Push Chavez to speed up his revolution. Short of civil war or assassination, it’s your only way out.

  6. Andres F Says:

    According to Wikipedia and other sources, that “old Chinese curse” is not really Chinese.

  7. Steven Says:

    I suspect that there were several reasons why PDVSA went after local companies, and the lack of access to international courts is one of them.

  8. moctavio Says:

    Local companies have to go to local Courts, except that Venprecar is owned in part by International Briquettes Holdings (IBH) which trades in the Nasdaq OTC, they may have some recourse.

  9. moctavio Says:

    The stry about the Central Bank selling dollars is a rumor, I fond it hard to believe they will do it, companies would demand as much as they can get and the rate would soar. It would also stop corruption.

  10. A.Guinand Says:

    $1.5B for Banco de Venezuela…

  11. Roberto Says:

    Is that a fair price? $1.5B

  12. A.Guinand Says:

    Sorry… $1.05 not $1.5

  13. Otro Roberto Says:

    Ken, I agree with you. I never meant to say that the oil price will go up in the very short-term to such highs. But maybe Chavez thinks so… You never know what could be thinking / expecting / hoping.

  14. moctavio Says:

    I think Chavez is planning on oil prices recovering….

  15. Ken Price Says:

    Moctavio:

    Chaves is NOT “planning” on oil prices recovering, he’s PRAYING for them to recover! Unless they do, Chavrz will be looking for a nice, warm tropical isle to spend his retirement.

  16. Andromeda Says:

    Who’s next: Pfizer

    Can’t wait to see Chavez promoting the bolivarian viagra pill.

  17. Roger Says:

    Needless to say that some are not happy about this http://www.buenosairesherald.com/argentina/note.jsp?idContent=602199&hideIntro=true What get me is that Chavez was down there just before doing this and Kirtchner has to stand for election in about a month with terrible approval ratings. I don’t see this helping her.

  18. Victor Hassan Says:

    Dos nimiedades: Una. OIH y Venprecar se han lucrado con gas a bajo precio, electricidad casi regalada y finos de mineral de hierro a precio de gallina paralítica, gracias a “Papá Estado”. La misma historia de siempre. Los poderosos robando a la nación. Cierto que el mandril Chavez las terminará de hundir, pero eso no desdice lo primero. Segunda: Ahora que dices, Victor Orozco ? Tu eras chavizta cuando la planta de OI estaba por comisionarse, ahora que te van a quitar la chupetita, que opinas?
    Conclusión: Solo se es chavizta cuando se trata de que jodan a los demás y mientras a tí no te jurunguen el Detroit.

  19. moctavio Says:

    Bueno, es muy facil decir lo que tu dices, pero eso es verdad de todas las empresas de Guayana. venezuela no tiene ninguna ventaja comparativa en aluminio, excepto la electricidad barata. Incluso, el imperio de aluminio fue desarrollado antes de descubrir bauxita en Venezuela y fue establecido por la electricidad barata.

    El gas hace tiempo que se paga a precio nacional, que el estado no lo homologue a precio internacional es otro problema, pero al mimso tiempo, muchas de estas empresas fueron establecidas para promover el uso de gas. Es al final un circulo vicioso.

    Ferrominera si les da los minerales a precios internacionales, pero no les da todo lo que necesitan, por lo cual importan y a precios internacionales ganan plata.

    Pero usar la palabra “lucro” es incorrecto. Orinoco Iron quebro, tan sencillo como eso, con todo y esos subsidios o como los quieras llamar. Despues de salir de la quiebra (perdieron los bancos), los precios de la briqueta subieron y eso les ha permitido mejorar la situacion de las empresas, pero los precos han vuelto a bajar.

    Esto va mas alla de “Papa Estado”. Venezuela, bajo Chavez o los de antes, nunca quiso sincerar los precios de materias primas y cuando CAP lo trato de hacer ya sabemos lo que paso. Por eso no arrancamos como pais.

    El problema es que los que saben de briquetas y sus procesos, que los hay, se iran del pais, y estas plantas seran manejadas con ineficiencia y se deterioraran gradualmente hasta que eso sera chatarra. Y el proceso de reversion sera caro y tardara mucho tiempo.

    Es al final, el Excremento de Diablo en pleno funcionamiento.

  20. moctavio Says:

    Quien es Victor Orozco, no entendi esa parte.

  21. Victor Hassan Says:

    En OI i Venprecar lo conocen. Gerente de Planta, de RRHH, etc.. Amiguisimo de Alberto Hassan (CEO de OI) desde los tiempos de GM.

    En OI asigno contratos a dedo a algunos amiguitos (quien sabe a cambio de que cosa). Meses depues cambio carro y se compro una lancha nueva.
    Mas de los mismo. Nada que no pase en otras partes.
    Pero…chavizta….eso es la guinda de la torta.

  22. Dayham Says:

    Vamos a ver, primero creo que deberás respetar a las personas que han fallecido.

    Supongo que eres un resentido social de primera categoría y entiendo por que hablas así.

    Vamos a ver, MI PADRE, VICTOR OROZCO, en sus inicios fue chavista, como muchas personas en ese país. Sin embargo, cambio antes de morir.

    Jamás en su vida dio un contrato a dedo como dices, y además, persona mas correcta que el en cuestiones de corrupción, no había.

    El carro, se lo daba la empresa de toda la vida, y la lancha, la cambiamos porque nos gustaba, con dinero bien ganado.

    Te pido, respetes la memoria de mi padre y dejes de estar haciendo comentarios fuera de lugar.

    Imagino que trabajas en el grupo sivensa, tranquilo que lo sabré, y tu sabrás que lo se…

  23. Gabriela santamaria Says:

    Sr. Que escribe, la verdad que el hijo de Victor Manuel Orozco Henriquez, tiene toda la razon y poco le escribio porque es muy decente.. Por lo que veo ud debe ser alguien que jamas estuvo cerca de Vitico… se ve muy bien que no lo conocio y nunca trabajo con el, porque todo su equipo todavia lo lloran. Poruqe era un hombre justo, HONESTO TOTAL, JAMAS ACEPTO REGALOS DE NADIE, Y SIEMPRE LUCHO PORQUE NO ACEPTABA VER ESO DE NINGUNA FORMA. Yo si se que se lo puedo decir porque lo conoci muy bien.
    Ud me da pena por como se expresa de personas que no conoce y porque no se atreve a hablar con su nombre y apellido directo con el Sr. Hassan? porque con el Ing Victor Orozco no podria, porque le quedara muy lejos a ud para llegar donde esta el en este momento, respeto su memoria por favor!!!!!! aca todavia quedamos personas que lo admiramos y quisimos mucho por su honestidad y profesionalismo y sobre todo por su calidad humana. Porque podria haber tenido muchos defectos como Ud y como yo, pero eso de lo que Ud lo acusa , nunca!!! creame senor esta errado en su pensamiento.
    Lamento que exista gente como Ud, levantando calumnias sin conocer a la gente de verdad. Que paso? nunca pudo trabajar en Sivensa ?y eso es lo que le duele?? pues quizas ud no se lo gano? porque realmente de la gente que trabajamos en Sivensa y que tuvimos como companero a VIctor Orozco sabiamos bien que tipo de persona era. Lo siento por Ud. y por Venezuela.

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    This ks the mainh reason I love devislexcrement.com. Insightful post.


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