On live TV, Venezuelan President Hugo Chavez signed the law on April 30 that re-nationalised the giant Sidor steelworks — majority owned by Argentinean-based Ternium corporation.
Sidor had been privatised by a pre-Chavez government in 1997, with Ternium owning 60% of the shares and the Venezuelan state and Sidor workforce owning 20% each. Chavez ordered Sidor to be re-nationalised after a 14-month long struggle by its work force over a collective contract, with management refusing to meet the workers' demands.
The Sidor workers had long demanded the company's re-nationalisation. Following Chavez's promise in January 2007 to re-nationalise "all that was privatised", Sidor workers spontaneously occupied the plant and flew the Venezuelan flag.
Venezuelanalysis.com reported on April 29 that negotiations between the government and Ternium over indemnity for the takeover had stalled. Chavez warned on his TV show Alo Presidente on April 27 that he would use a presidential decree to expropriate Sidor if an agreement on a "just" price for the company could not be reached.
Ternium has estimated the value of its assets as US$3.6 billion. Chavez responded to this figure by declaring on Alo Presidente: "What do the owners of this company think, that we are morons?"
"I laughed at that", Chavez said. "I am not going to pay that amount because this company is not worth that much."
Instead, the Venezuelan government valued the assets at $800 million, based on a thorough "economic diagnosis" of the company conducted by the government's negotiating team, according to Venezuelanalysis.com.
Venezuelanlaysis.com reported that Ternium based its valuation not simply on the market value of its shares, but "opportunity cost", including the potential cost of purchasing another plant in a different country.
On the other side, the government said it "would deduct from its compensation offer the value of environmental damages, false accounting, outstanding company debts, and the pending collective labor contract", Venezuelanalysis.com said.
Also incorporated into the government's offer is the cost of re-incorporating the 9000 workers, a majority of Sidor's work force, who had been turned into contract workers. Its use of contract labour violates Venezuelan law and was denounced by Venezuelan minister for basic industry Roldofo Sanz as a "scheme of super-exploitation".
Venezuelanalysis.com reported that negotiations between and the government and the United Steel Industries Workers Union (SUTISS) over a new collective contract were "on the upswing". Agreement has been reached over the wage increases and other benefits demanded by SUTISS that had been rejected by Sidor's former owners.
However, the government offer for back-wages the union says the workers are owed fell short of union demands, leading SUTISS general secretary Nerio Fuentes to comment that "the struggle continues".