Tales Of Bolivarian Inefficiency II: The “New” Venezuelan Steel Industry

April 28, 2014

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Continuing on this short (or long, maybe) series of Tales of Bolivarian Inefficiency, this time we look at something that you may have missed during Easter or Holy week, as the Chinese Vice-Premier came to Caracas and signed a bunch of contracts with various Government institutions. As usual, the details are scant, but the steel and aluminum agreements are certainly intriguing and appear to be a waste of money.

The “New” Venezuelan Steel Industry

While many people were on vacation or resting over the Holy Week holiday, China’s Foreign Minister Wang Yi was in Venezuela and is usually the case in these visits he was accompanied by a number of representatives of Chinese firms and institutions to sign cooperation agreements.

Two of the agreements are loans, which are part of the Joint Chinese Venezuela Fund, which were signed by none other than Diosdado Cabello’s brother Jose David Cabello, who mostly announced them via Twitter. But there was a press release and as is customary in topics relating to Guayana, Damian Prat was on top of it.

The steel project is perhaps the strangest one. This contract with China Minmetals Engineering Co. Ltd, Chalieco, involves according to what little has been informed, to purchase and install a continuous smelter for round products in order to continue diversifying the steel products that Sidor produces. Supposedly, this will allow for the production of an additional 700,000 Tons of steel products. This steel will in turn allow for the production of pipes in a new plant.

Now, as Prat points out, this makes little sense. The Chavista Government nationalized in 2008 the Tavsa pipe plant and immediately proceeded to shut it down, in order to start importing the same pipes from China. the question is then, where is this new plant and why instead of starting a new project, doesn’t the Government revive Tavsa, which has received no funding and sits there languishing after six years.

But more importantly, where is the steel going to come from? When Chávez nationalized the Sidor plant, it was producing 4 million Tins a year of steel. Today, six years later, it is expected to produce less than 1.5 million Tons, the amount produced in 2013. This is insufficient to satisfy the demands of the Venezuelan market, let alone to supply any new plant. Why are they building something new, instead of using the money to restart Sidor and Tavsa and invest in parts and supplies to get them going?

What is most ridiculous is that, much like in the case of the sugar processing plants, Cabello, who is new in the Ministry for Industries said: “Recovering companies that were abandoned has been a characteristic of the Bolivarian Government. We will work as a team to fulfill this …”

Well, we don’t know what other companies he is referring to that have been recovered by the fake revolution, but in this particular case, it was his idol Hugo Chávez that nationalized these companies, which then began receiving no backing, no funding, no financing and were mismanaged. This is why they are  in the deplorable state they are in.

But the mystery remains about the new pipeline plant that Cabello referred too, as nobody knows of such plans. So, even if ture, if the new plant does not exist, what is the point anyway.

Separately, Cabello also announced a contract with Challieco for US$ 500 million (how easy they throw these figures around!) to recover production in Venalum. The same company was hired in 2011 to build parts in China for Venalum, which for forty years had been built in Venezuela. The debt was incurred, but as far as anyone can determine, nothing was ever installed and it is unclear what happened with the U$ 403 million.

In the meantime, this financing has to be paid someday by future generations and the revolution is deaf to the questioning about the projects. Where is the money? What was it used for? Did someone pocket it? Who made money when Tavsa was shut down and its production replaced by Chinese imports? Who is responsible for this disaster?

You can’t ask these questions because largely, the same actors that were in charge then are in charge now.

I wrote earlier about the book by Prat Guayana: The Upside Miracle, the destruction of Tavsa and Sidor is all documented there. But the decimation of the country continues in the name on the revolution. And nobody in Governemnt does or says anything. In fact, they continue the destruction and the mindless indebtedness of the country.

Next: Part III: Chávez’ Frozen Cuba Dream

 

 

21 Responses to “Tales Of Bolivarian Inefficiency II: The “New” Venezuelan Steel Industry”

  1. Jose L. Marcos Says:

    Sidor used to manufacture Tinplate and Chromed plate for metal food cans. Think Tuna, Sardines, Vegetables and also Paint and Aerosol cans, that are non-food.

    This is one of the most difficult metallurgical products. Sidor was able to supply the local market and export at the same time. With a reasonably good quality, similar or better than Brazil’s Tinplate.

    Nowadays, no exports and not even enough production for the local market. Therefore, the government has allowed can manufacturers to import Tinplate and can fillers to import empty cans.

    Next step, Sidor will import the Tinplate for resale in the local market.

    Wouldn’t it be better to give Sidor the money to fix their lines and restart local production? One wonders…….

  2. Ronaldo Says:

    “The debt was incurred, but as far as anyone can determine, nothing was ever installed and it is unclear what happened with the U$ 403 million.”

    Could this have been a brazen theft of $403 million? Did the government allocate and fund these projects with no intention for any of it to go into advancing industry?

    How many Generals were in charge of this project? WTF are military personnel doing in the photo above?

    • moctavio Says:

      Of course it could have been that, that is why I think it happened.

      As to the military, they run everything, that is why everything is in such bad state.

  3. John Barnard Says:

    I’m enjoying this series! –jsb

  4. george Says:

    it is better for the gov people to abandon a project instead of renew it because if it is a new contract, project etc, a new bid goes out and with it the commissions. no commissions to restore an exsisting project

  5. xp Says:

    Re: … But the decimation of the country continues
    . But the decimation of the country continues
    . But the decimation of the country continues
    . But the decimation of the country continues
    . But the decimation of the country continues
    . But the decimation of the country continues
    . But the decimation of the country continues
    . But the decimation of the country continues

  6. N Smith Says:

    Happy birthday Miguel.

  7. Shrillary Clinton Says:

    you people better be learning to speak Chinese……they own yours asses lock stock and barrel

  8. LT Says:

    I am saddened by the sudden demise of Eliecer Otaiza. He was a tough guy that needed no bodyguards. With so much crime, one does not know if he was marked for death or just at the wrong place at the wrong time. On another note, it’s now official that Venezuela is the world’s most miserable country:

    http://www.cato.org/publications/commentary/measuring-misery-around-world

  9. LT Says:

    Useless tidbit: A lot of the enchufados that live in Doralzuela have their houses in foreclosure. These folks made good coin exporting everything from medical equipment to screws (tornillos). The import-export bonanza has been over for a while and houses bought are now under water or they are unable or unwilling to pay their mortgages and will live in these house almost free until the bank closes which in some cases takes 3-4 years.

    • xp Says:

      Safer atornillados in dolarzuela, than mugged in ccs country club

    • Ira Says:

      I seriously doubt they’re alone in being upside-down and in foreclosure danger:

      The economy in these matters doesn’t discriminate–millions of homeowners have found themselves in the situation.


  10. What’s up with the Santeria dolls in the photo?

  11. Ira Says:

    I know that in the economic scheme of things, this means nothing.,,

    But I’m dying to know what happened to that little trout farm they expropriated a few years ago!

  12. OpUno Says:

    Heh. Commenting, since living on Guayana gives you a first hand look at the whole shitpile.

    The most fun thing is what happened to the syndicates.

    You see, a lot of those syndicates are on the PCV (Communist Party fo Venezuela), and, at the beggining of the revolution, since the PCV as a whole is bitter that Chávez was the one to deliver the country to Castro and not them despite the fact that they tried to do it for decades, the syndicate leaders got promoted to leadership/management positions as a bribe.

    Enter the usual chavista crash and burn of whatever they touch.

    After that, the syndicate leaders got all the blame, they got removed from said positions and the chavistas put military thugs in charge to crush dissent.

    The author of all of this? The fat spider that is on the center of the web of corruption of the Guayana public companies, the Governor of Bolívar State, General Francisco Rangel Gómez.

    Also, the terrible management policies are on purpouse. An open secret on this city is that there’s reports, dated from 2008 and earlier, that predicted the crash-and-burn of all the public companies, with special detail on the electrical companies, if the policies continued as-is. Of course, you won’t get those reports, the SEBIN’s inquisitors (that do visits to ensure loyalty) and rampant paranoia makes sure that anybody that tries gets on jail.

  13. Rafael Vicente. Says:

    Diablo, I do not understand how this government has destuido pioneers in technology, such as the sideruguicas, FIMET creators of technology, for the manufacture of briquettes, and now we have to import, when not too distant past were born exporters this product, for God does not pardon this crime, and workers of these companies are complicit in the destruction of all companies in Guyana, for a quiet and pernacer vozal arepas.


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